07 Transpo Compiled Digests. Week 8. Atty.

Ampil 3C 1
2015.

CONTENTS

VIII. 8th week (Common carriers, damages)...................................................2

1 Marchan v. Mendoza, 24 SCRA 888 –Tandoc...............................................2
2 Fores v. Miranda, 105 Phil 266 –Tiu...............................................................3
3 Phil. Rabbit Bus Lines v. Esguerra, 117 SCRA 741* -Puno.....................5
4 China Airlines v. IAC 169 SCRA 226 –Sanchez............................................6
6 PAL v. Miano, 242 SCRA 235 -Nathan Oducado..........................................7
7 Tan v. Northwest Airlines, Inc., 327 SCRA 263 –Bascara........................9
8 Laguna Tayabas Bus v. Cornista, 11 SCRA 181* -Respicio...................10
9 Armovit v. CA, 184 SCRA 476 –Aquino........................................................11
10 Trans World Airlines v. CA, 165 SCRA 143 –Benedicto......................12
11 Alitalia Airways, Inc. v. CA, 187 SCRA 763 –Chan.................................14
12 PAL v. CA, 188 SCRA 461 –Cortez...............................................................16
13 Zalamea v. CA, 228 SCRA 23* -Cruz Nenzo..............................................18
14 Singson v. CA, 282 SCRA 149* -Dela Paz..................................................22
15 Laguna Tayabas Bus v. Diasanta, 11 SCRA 474 –Geraldez................25
16 Munsayac v. De Lara, 23 SCRA 1086 –King.............................................26
17 Sarkies Tours v. IAC, 124 SCRA 588 –Lagos...........................................27
18 R Transport Corp. v. Eduardo Pante, 599 SCRA 747 –Lopa..............29
19 Sulpicio Lines v. Domingo E. Curso, 615 SCRA 575 –Lucenario.....30
20 Philippine Hawk v. Vivian Tan Lee, 612 SCRA 576 –Magtagnob....32
21 Air France v. Gillego, 638 SCRA 472 –Muti..............................................34

VIII. 8TH WEEK (COMMON CARRIERS, DAMAGES)
1 MARCHAN V. MENDOZA, 24 SCRA 888 –TANDOC
Common Carrier Philippine Rabbit Bus
Passenger Arsenio Mendoza together with his wife and child
Problem When the bus was going back to its proper lane after overtaking the
parked truck, its rear tires skidded because of the speed. The wife
and child were thrown out of the bus. Whether Mendoza is entitled
to exemplary damages even though it is not pleaded? YES.
Who Won Passenger Mendoza
ER: One evening, Arsenio Mendoza together with his wife and child rode on a bus being
operated by Philippine Rabbit in Bulacan. The bus was bound for Manila. The driver
Silverio Mendoza was driving too fast. To avoid hitting a six-by-six truck which was
parked on the road, he overtook it. He had to increase the speed to avoid the vehicle
which was coming from the opposite direction. When the bus was going back to its
proper lane, its rear tires skidded because of the speed. The bus then fell into a ditch.
Mendoza together with his wife and child were thrown out of the bus because of the
impact. Mendoza was badly injured. His vertebrae was badly injured to the point that
his limbs were paralyzed. He could not walk anymore
ISSUES
1. WON he is entitled to actual damages of P40,000-YES
2. WON he is entitled to exemplary damages even though it is not pleaded. –yes
RATIO:
1. The court considered that he was just 26 years old when the accident happened. He
had more than 30 years to earn. The P40,000 as compensatory damages is
equitable
2. that exemplary damages may be imposed by way of example or correction
only in addition, among others, to compensatory damages, but that they
cannot be recovered as a matter of right, their determination depending upon
the discretion of the court.
a. It further appears that the amount of exemplary damages need not be
proved, because its determination depends upon the amount of
compensatory damages that may be awarded to the claimant.
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2015.
b. If the amount of exemplary damages need not be proved, it need not
also be alleged, and the reason is obvious because it is merely
incidental or dependent upon what the court may award as
compensatory damage
FACTS:
-In the evening, between 9:00 and 9:30 o'clock, a passenger bus No. 141 of the
Philippine Rabbit Bus Lines, which was then driven by Silverio Marchan fell into a ditch
somewhere in Barrio Malanday, Polo, Bulacan, while travelling on its way to Manila;
- as a result of which plaintiffs-appellees Arsenio Mendoza, his wife and child who were
then inside the bus as passengers were thrown out to the ground resulting in their
multiple injuries.
-As they travelled along the highway bound for Manila, said bus was traveling at a high
rate of speed without due regard to the safety of the passengers.
So much so that one of the passengers had to call the attention of Silverio Marchan who
was then at the steering wheel of said bus to lessen the speed or to slow down, but then
defendant Silverio Marchan did not heed the request of said passenger; neither did he
slacken his speed. On the contrary, defendant Silverio Marchan even increased his speed
while approaching a six-by-six truck which was then parked ahead, apparently for the
purpose of passing the said parked truck and to avoid collision with the incoming
vehicle from the opposite direction.
But, when appellant Silverio Marchan veered his truck to resume position over the right
lane, the rear tires of said truck skidded because of his high rate of speed, thereby
causing said truck to fall into a ditch
Plaintiff Arsenio Mendoza suffered the most serious injuries which damaged his
vertebrae causing the paralysis of his lower extremities which up to the time when this
case was tried he continued to suffer.
The physician who attended and treated plaintiff Arsenio Mendoza opined that he may
never walk again
ISSUES:
1. W/on Mendoza is entitled to P40,000 for compensatory damage. -yes
2. W/on Mendoza is entitled to exemplary damage even though it was not pleaded. –
yes

HELD: WHEREFORE, as thus modified, the decision is affirmed, petitioners being liable
for the sum of P40,000.00 in the concept of compensatory damages with interest at the
legal rate from and after January 26, 1960, and the sum of P30,000.00 as exemplary
damages with interest at the legal rate from and after December 14, 1964, as well as for
the sum of P5,000.00 as attorney's fees, likewise earning a legal rate of interest from and
after January 26, 1960. Costs against petitioners.
RATIO:
1. As to why the amount in compensatory damages should be fixed in the sum of
P40,000.00 is explained in the appealed decision thus: "Likewise, it is our
considered view that the amount of P40,000.00 awarded by the court below as
compensatory damages is quite reasonable and fair, considering that plaintiff
Arsenio Mendoza had suffered paralysis on the lower extremities, which will
incapacitate him to engage in his customary occupation throughout the remaining
years of his life, especially so if we take into account that plaintiff Arsenio Mendoza
was only 26 years old when he met an accident on January 22, 1954; and taking the
average span of life of a Filipino, he may be expected to live for 30 years more; and
bearing in mind the earning capacity of Arsenio Mendoza who before the happening
of this accident derived an income of almost P100.00 a month from the business of
his father-in-law as Assistant Supervisor of the small [fairs] and his income of
P100.00 a month which he derived as a professional boxer." 8 Considering that
respondent Arsenio Mendoza was only in his middle twenties when, thru the
negligence of petitioners, he lost the use of his limbs, being condemned for the
remainder of his life to be a paralytic, in effect leading a maimed, well-nigh useless
existence, the fixing of such liability in the amount of P40,000.00 as compensatory
damages was well within the discretion of the Court of Appeals
2. "We now come to the imposition of exemplary damages upon defendants-
appellants' carrier. It is argued that this Court is without jurisdiction to adjudicate
this exemplary damages since there was no allegation nor prayer, nor proof, nor
counterclaim of error for the same by the appellees. It is to be observed however,
that in the complaint, plaintiffs "prayed for such other and further relief as this
Court may deem just and equitable." Now, since the body of the complaint sought to
recover damages against the defendant-carrier wherein plaintiffs prayed for
indemnification for the damages they suffered as a result of the negligence of said
Silverio Marchan who is appellant's employee; and since exemplary damages is
intimately connected with general damages, plaintiffs may not be expected to single
out by express term the kind of damages they are trying to recover against the
defendant's carrier. Suffice it to state that when plaintiffs prayed in their complaint
for such other relief and remedies that may be availed of under the premises, in
effect, therefore, the court is called upon the exercise and use its discretion whether
07 Transpo Compiled Digests. Week 8. Atty. Ampil 3C 3
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the imposition of punitive or exemplary damages even though not expressly prayed
or pleaded in the plaintiffs' complaint."9
In support of the above view, Singson v. Aragon was cited by the Court of
Appeals. 10 As was there held by this Court: "From the above legal provisions it
appears that exemplary damages may be imposed by way of example or
correction only in addition, among others, to compensatory damages, but that
they cannot be recovered as a matter of right, their determination depending
upon the discretion of the court. It further appears that the amount of
exemplary damages need not be proved, because its determination depends
upon the amount of compensatory damages that may be awarded to the
claimant. If the amount of exemplary damages need not be proved, it need not
also be alleged, and the reason is obvious because it is merely incidental or
dependent upon what the court may award as compensatory damages . Unless
and until this premise is determined and established, what may be claimed as
exemplary damages would amount to a mere surmise or speculation. It follows
as a necessary consequence that the amount of exemplary damages need not
be pleaded in the complaint because the same cannot be predetermined. One
can merely ask that it be determined by the court if in the use of its discretion
the same is warranted by the evidence, and this is just what appellee has
done.".
2 FORES V. MIRANDA, 105 PHIL 266 –TIU
Common Carrier Jeep driven by Luga and owned by Fores
Passenger Miranda
Incident Jeep was overspeeding going down a bridge, driver loses control,
and the jeep crashes into the bridge wall, injuring Miranda in the
process
Problem The CA awarded moral damages to Miranda, despite the fact that he
did not die and there was no finding of bad faith on the part of the
carrier.
Who Won The moral damages were discarded in favor of Fores.
ER: Miranda, a painter and a Fine Arts professors, was a passenger in a keep driven by
Luga and owned by Fores. In the morning of the accident, the jeep was speeding while
descending the Sta. Mesa bridge. Luga lost control and the jeep hit the bridge wall,
causing injury to 5 passengers, including Miranda.
Miranda won in the CFI and this decision was sustained by the CA. The CA reduced the
actual damages from 10K to 2K, which was upheld by the SC.
The CA also awarded attorney’s fees in the amount of 3K, which was upheld by the SC.
However, the CA awarded 5K worth of moral damages, which was deleted by the
SC.

According to the SC, in breaches of contract of carriage, moral damages may be awarded
only when death occurs or when there is a finding of bad faith on the part of the carrier.
None of those conditions obtain in this case. Moreover, a mere carelessness of the
carrier’s driver per se is not tantamount to bad faith.
COMPLETE
Facts: Miranda was a passenger on a jeep driven by Eugenio Luga. While the jeep was
descending the Sta. Mesa bridge at an excessive rate of speed, the driver lost control,
causing the jeep to swerve and to hit the bridge wall. 5 passengers were injured,
including Miranda who suffered a fracture of the upper right humerus. He was taken
to the National Orthopedic Hospital and later was subjected to a series of operations; 3
in total.
- Luga was charged with serious physical injuries through reckless imprudence and was
convicted. On appeal, Fores argued that the evidence did not sufficiently establish the
identity of the jeep as the belonging him, but this was rejected as the jeep carried plate
no. TPU-1163, Series of 1952, QC, registered in the name of Fores, and that the jeep even
had the name of "Doñ a Paz" painted below its wind shield.
- Fores also alleged that 1 day before the accident, she sold the jeep to Carmen
Sackerman, but this was rejected as it is settled that a transfer, if made without the
approval of the Public Service Commission, is not effective and binding in so far as the
responsibility of the grantee under the franchise in relation to the public is concerned.
- The P10K actual damages awarded by the CFI was reduced by the CA to only P2K, as a
review of the records failed to disclose a sufficient basis for the CFI’s appraisal – the only
evidence presented was Miranda’s bare statement that his expenses and loss of income
amounted to P20K. This notwithstanding, Fores argues that the damages awarded were
excessive (1). The 3K attorney's fees also awarded are assailed because the CFI did not
provided for the same, and since no appeal was interposed by Miranda, the CA cannot
award the same motu proprio (2). Lastly, Fores assails the 5K award of moral damages
by the CA (3).
Issue: Whether or not the damages award were proper? Actual damages and attorney’s
fees were proper, but moral damages were discarded.
Held: (1) As the CFI held, “it cannot be denied that Miranda incurred expenses.” Also,
Miranda was a painter by profession and a professor of Fine Arts, so that the amount of
P2,000 awarded cannot be said to be excessive.
(2) Fores fails to note that attorney's fees are included in the concept of actual damages
under the Civil Code and may be awarded whenever the court deems it is just and
equitable. There is no reason to alter these awards.
(3) Moral damages are not recoverable in damage actions predicted on a breach of
the contract of transportation, in view of Articles 2219 and 2220 of the Civil Code.
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- (a) In case of breach of contract (including one of transportation) proof of
bad faith or fraud (dolus), i.e., wanton or deliberately injurious conduct, is
essential to justify an award of moral damages; and
(b) a breach of contract cannot be considered included in the descriptive term
"analogous cases" used in Art. 2219; not only because Art. 2220 specifically
provides for the damages that are caused by contractual breach, but because
the definition of quasi-delict in Art. 2176 expressly excludes the cases where
there is a "preexisting contractual relation between the parties."
- The exception to the basic rule of damages is a mishap resulting in the
death of a passenger, in which case Article 1764 makes the common
carrier expressly subject to the rule of Art. 2206, that entitles the
deceased passenger to "demand moral damages for mental anguish by
reason of the death of the deceased.”
- But the exceptional rule of Art. 1764 makes it all the more evident that
where the injured passenger does not die, moral damages are not
recoverable, unless it is proved that the carrier was guilty of malice or
bad faith.
- The mere carelessness of the carrier's driver does not per se constitute of justify an
inference of malice or bad faith on the part of the carrier.
- To award moral damages for breach of contract, therefore, without proof of bad faith
or malice on the part of the defendant would be to violate the clear provisions of the law
and constitute unwarranted judicial legislation.
 Here, there is no other evidence of such malice to support the award of moral
damages by the CA. Thus, such damages must be discarded.
Bonus: The advantageous position of a party suing a carrier for breach of the contract of
transportations explains, to some extent, the limitations imposed by the Code on the
amount of the recovery. The action for breach of contract imposes on the defendant
carrier a presumption of liability upon mere proof of injury to the passenger; that
passenger is relieved from the duty to established the fault of the carrier, or of his
employees, and the burden is placed on the carrier to prove that it was due to an
unforseen event or to force majeure.
- The carrier, unlike in suits for quasi-delict, may not escape liability by proving that it
has exercised due diligence in the selection and supervision of its employees.
- The difference in conditions, defenses and proof, as well as the codal concept of quasi-
delict as essentially extra contractual negligence, compel us to differentiate between
action ex contractu, and actions quasi ex delicto, and prevent us from viewing the action
for breach of contract as simultaneously embodying an action on tort. Neither can this

action be taken as one to enforce on employee's liability under Art. 103 of the Revised
Penal Code, since the responsibility is not alleged to be subsidiary, nor is there on record
any averment or proof that the driver of appellant was insolvent. In fact, he is not even
made a party to the suit.
- It is also suggested that a carrier's violation of its engagement to safety transport the
passenger involves a breach of the passenger's confidence, and therefore should be
regarded as a breach of contract in bad faith, justifying recovery of moral damages
under Art. 2220. This theory is untenable, for under it the carrier would always be
deemed in bad faith, in every case its obligation to the passenger is infringed, and it
would be never accountable for simple negligence; while under the law (Art. 1756). the
presumption is that common carriers acted negligently (and not maliciously), and Art.
1762 speaks of negligence of the common carrier.
- The distinction between fraud, bad faith, or malice in the sense of deliberate or wanton
wrong doing and negligence (as mere carelessness) is too fundamental in our law to be
ignored (Arts. 1170-1172); their consequences being clearly differentiated by the Code.
- In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible
for all damages which may be reasonably attributed to the non-performance of the
obligation.
- It is to be presumed, in the absence of statutory provision to the contrary, that this
difference was in the mind of the lawmakers when in Art. 2220 they limited recovery of
moral damages to breaches of contract in bad faith. It is true that negligence may be
occasionally so gross as to amount to malice; but that fact must be shown in evidence,
and a carrier's bad faith is not to be lightly inferred from a mere finding that the contract
was breached through negligence of the carrier's employees.
3 PHIL. RABBIT BUS LINES V. ESGUERRA, 117 SCRA 741* -PUNO
PHILIPPINE RABBIT BUS LINES, INC. and NICASIO DE LOS REYES v. PATROCINIO
ESGUERRA, TRANSPORT CONTRACTORS, INC. and MODESTO JOAQUIN
G.R. No. L-31420 October 23, 1982
EMERGENCY RECITATION
Common Carrier Philippine Rabbit Bus
Passenger Patrocinio Esguerra
Problem Freight truck, owned by TCI, coming from the opposite direction
sideswiped the bus which shattered the glass. Esguerra’s left
forearm was hit and was amputated. PRBL Inc. questions the award
of moral damages and attorney’s fees.
Who Won Esguerra, but as to the issue of moral damages, it was not awarded
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in this action for breach of contract.
Esguerra was a passenger of Phil. Rabbit Bus Lines Inc. (PRBL Inc.) who boarded the bus
at the Manila Terminal bound for San Fernando, Pampanga. He sat 4 rows behind the
driver on the left side of the bus near the window. In Bulacan, a freight truck, owned
by TCI, coming from the opposite direction sideswiped the bus which shattered
the glass. Esguerra’s left forearm was hit by a hard blunt object breaking his bones
into small fragments while the soft tissues of the muscles and skin were
mascerated. He was brought to the Bulacan Provincial Hospital in Malolos but his arm
was still amputated.
He filed a civil case for damages against the 2 companies and the 2 drivers. CFI Manila
awarded Esguerra P20,085.40 for compensatory damages, P5,000 for moral damages
and attorney’s fees. CA affirmed the awards. PRBL Inc. questions the award of moral
damages and attorney’s fees.
The SC reversed the CA as to moral damages. Articles 2219 and 2220 of the New Civil
Code provide the general rule that moral damages are not awarded in actions for
breach of contract. The exceptions are (1) where the mishap results in the death
of a passenger, and (2) where it is proved that the carrier was guilty of fraud or
bad faith, even if death does not result.
The two vehicles sideswiped each other at the middle of the road. This means both
vehicles were in their respective lanes and that they did not invade the lane of the
other. It cannot be said, therefore, that there was fraud or bad faith on the part of
the carrier's driver. This being the case, no moral damages are recoverable. As to
attorney’s fees, this need not be proved since this is granted upon the discretion of the
court upon review of the facts of the case.
FACTS
Patrocinio Esguerra was a paying passenger of Bus No. 223 of Philippine Rabbit Bus
Lines, Inc (PRBL Inc). At 4pm on November 6, 1961, he boarded the bus at the Manila
terminal, bound for San Fernando, Pampanga. He sat at the left side, fourth row behind
the driver, close to the window. As the bus approached barrio San Marcos, Calumpit,
Bulacan, a freight truck owned and operated by the Transport Contractors, Inc. (TCI)
was coming from the opposite direction. The vehicles sideswiped each other. The
window glass near the driver's seat of the Rabbit Bus was detached and the left side of
its body was damaged. The left forearm of Patrocinio Esguerra was hit by a hard blunt
object, breaking the bones into small fragments while the soft tissues of the muscles and
the skin were mascerated. He was immediately brought to the Bulacan Provincial
Hospital in Malolos, Bulacan for treatment. The left arm was amputated.

He filed a civil case against both drivers and both companies. He prayed for damages
against all the defendants requiring them to pay, jointly and severally damages, 1) actual
or compensatory, 2) moral and 3)exemplary, for the litigation expenses and costs.
In Civil Case No. 53698, the CFI Manila dismissed the case against TCI and its driver
Modesto Joaquin but sentenced PRBL Inc. and its driver Nicasio de los Reyes, to pay the
Esguerra the sum of P25,085.40 as compensatory damages, P5,000.00 as moral
damages, P2,000.00 as attorney's fees and the costs of suit.
The CA found that the two drivers of the two vehicles were reckless in driving and
should be held solidarily liable since the 2 vehicles sideswiped each other at the middle
of the road. But since Esguerra did not appeal and only PRBL Inc appealed the judgment,
TCI and Joaquin were thereafter absolved. It modified the CFi’s decision.
However, in a resolution, dated December 8, 1969, the Court of Appeals modified this
decision and held TCI and Joaquin as solidarily liable for the sums awarded. The
compensatory damage award was also reduced to P20,085.40.
PRBL Inc appealed.
ISSUE: Whether:
1) the award of P 5,000.00 moral damages is contrary to law since a carrier
cannot be liable for moral damages except when the mishap results in death
and where it is proved that the carrier was guilty of fraud or bad faith even if
death did not result
2) the award of P 2,000 as attorney’s fees is bereft of legal and factual basis for
Esguerra’s failure to show actual proof of expenses for attorney's fees
HELD: Award of moral damages is contrary to jurisprudence. Attorney’s Fees are
granted upon the discretion of the court.
RATIO This Court has held (Cachero v. Manila Yellow Taxicab, Inc., Necesito v. Paras,
Fores v. Miranda, Tamayo v. Aquino) that moral damages are not recoverable in actions
for damages predicated on a breach of the contract of transportation in view of the
provisions of Articles 2219 and 2220 of the New Civil Code. The exceptions are (1)
where the mishap results in the death of a passenger, and (2) where it is proved that the
carrier was guilty of fraud or bad faith, even if death does not result.
The Court of Appeals found that the two vehicles sideswiped each other at the middle of
the road. In other words, both vehicles were in their respective lanes and that they did
not invade the lane of the other. It cannot be said, therefore, that there was fraud or bad
faith on the part of the carrier's driver. This being the case, no moral damages are
recoverable.
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However, with respect to attorney's fee of P2,000.00, the same need not be proved since
this is allowed in the discretion of the court. In this case, Esguerra was compelled to
litigate and incur expenses in order to protect his interest.
4 CHINA AIRLINES V. IAC 169 SCRA 226 –SANCHEZ
China Airlines, Ltd. v. Intermediate Appellate Court
Common Carrier China Airlines
Passenger Claudia Osorio
Problem When Osorio arrived at SF, they weren’t furnished a connecting
flight, because of failure of communication between the SF and
Manila offices. WON IAC correctly granted moral and exemplary
damages? No.
Who Won Osorio, but MODIFIED in that the award of moral and exemplary
damages to Osorio is eliminated and the attorney's fees is increased
to P10,000.00
ER: Osorio and 9 others bought tickets from Manila to Los Angeles. The flight got
delayed and China Airlines agreed for a stopover at Taipei  San Francisco  LA.
However, when Osorio arrived at SF, they weren’t furnished a connecting flight, because
of failure of communication between the SF and Manila offices. They were forced to stay
the night at the YMCA. They eventually bought a ticket to LAX two days after landing.
Osorio sued China Airlines at CFI Manila.
CFI Ruling: in favour of China; APPEAL to IAC: In favour of Osorio… and the IAC granted
moral and exemplary damages. China appeals.
ISSUE: whether the grant of moral or exemplary damages is properly awarded?
NO.
Held: To grant moral damages in a K of carriage, it must either result in the
death of the passenger, or there must be bad faith. There was no bad faith because a
telex is a normal procedure to be done in confirming the connecting flight, and because
of the time difference between Manila and SF. No exemplary damages still because acted
in a wanton, fraudulent, reckless, oppressive or malevolent manner.
FACTS:
- Osorio and 9 other people bought a China Airlines tickets to LAX (Los Angeles) from
Manila.
- However, there were unexplainable delays, to which China Airlines agreed with
OSORIO, et al. to would spend the night in Taipei at petitioner's expense and would

be brought the following day to San Francisco (SF), U.S.A., where they would be
furnished an immediate flight connection to LAX.
- OSORIO, et al. arrived at San Francisco at 1:31 PM, but were not furnished a
connecting flight to LAX. A telex was made to Manila to confirm the validity of the
connecting flight, but this was not possible because of the time difference between
Manila and the USA.
- Word only came from Manila on 6:45 PM in confirming the connecting flight.
o Because of this, OSIORIO left the SF Office and spent the night at the
YMCA. They paid $5.00. Two days after, OSORIO bought a Western
Airlines ticket from SF to LAX.
- OSORIO filed an action for damages for breach of contract at the CFI of Manila.
- CFI DECISION: In favour of China Airlines, except for the Western Airlines ticket and
$100.
o OSORIO appealed to the IAC.
- IAC DECISION: In favour of Osorio. She was awarded actual damages imposed by
the trial court, moral and exemplary damages in the amounts of P100,000 and
P20,000, respectively, with attorney's fees of P5,000.
- China appeals to the Supreme Court.
ISSUE:
- [1st issue] Whether there was a breach of the contract of carriage. YES
- [2nd issue, IMPORTANT FOR OUR TOPIC] Whether the grant of moral or exemplary
damages was justified. No.
HELD:
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respondent as a passenger. Telex was the established mode of communication
between petitioner's Manila and San Francisco offices. Contact by telephone was
not a practice due to the time difference between the two places. 
2nd issue
- The breach of contract under consideration having been incurred in good
faith, petitioner airlines is liable for damages which are the natural and probable
consequences of said breach and which the parties have foreseen at the time the
obligation was constituted.
MORAL DAMAGES
- With respect to moral damages, the rule is that the same are recoverable in a
damage suit predicated upon a breach of contract of carriage only where
o [1] the mishap results in the death of a passenger or
o [2] it is proved that the carrier was guilty of fraud or bad faith, even
if death does not result.  
- As the present case does not fall under either of the cited instances, the award
of moral damages should be, as it is hereby disallowed.
EXEMPLARY DAMAGES
The award of exemplary damages must likewise be deleted, as it has not been
shown that petitioner, in committing the breach of contract of carriage, acted in a
wanton, fraudulent, reckless, oppressive or malevolent manner.

WHEREFORE, the decision under review is hereby MODIFIED in that the award of moral 5 PAL V. MIANO, 242 SCRA 235 -NATHAN ODUCADO
and exemplary damages to private respondent Claudia B. Osorio is eliminated and the
attorney's fees is increased to P10,000.00. No pronouncement as to costs. PAL v. MIANO
G.R. No. 106664 || March 8, 1995|| Puno J.
RATIO:
Petitioner: PHILIPPINE AIR LINES
1st issue Respondent: FLORANTE A. MIANO

- Verily, petitioner airlines committed a breach of contract in failing to secure an Common Carrier Philippine Airlines
immediate flight connection for private respondent. Under Article 1755 of the Civil Passenger Florante Miano
Code of the Philippines, petitioner, as a common carrier, is duty bound to "carry Problem When he got to Vienna his luggage was missing. When he got the
passengers safely as far as human care and foresight can provide, using the utmost luggage after 11 days, his Nikkon Camera was missing. Moral and
diligence of very cautious persons, with due regard for all the circumstances." The exemplary damage; as well as attorney’s fees were awarded by
reliance of petitioner on the subject telex communications falls short of the utmost RTC.
diligence of a very cautious person expected of it, thereby rendering it liable for its Who Won Miano, but MODIFIED deleting the award of moral and exemplary
failure to abide by the promised immediate connection. damages and attorney's fees.
- The breach of contract committed by petitioner was not attended by gross
negligence, recklessness or wanton disregard of the rights of private EMERGENCY RECIT:
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Miano took PAL flight PR 722 to Frankfurt, Germany. He had a connecting flight via  In its reply, PAL informed Miano that his letter was forwarded to its legal
Lufthansa. He checked in a brown luggage bag, allegedly containing money, documents, department for investigation.
clothes, and a Nikkon camera with lens. When he got to Vienna his luggage was missing,  Feeling that his demand letter was left unheeded. He instituted an action for
he then reported this to the Lufthansa authorities. 11 days after his luggage was Damages docketed as Civil Case No. 89-3496 before the RTC of Makati.
delivered to him in his hotel in Pistany, Czechslovakia. He claimed that he was forced to  PAL argued that there was neither a report of mishandled baggage on flight PR
borrow money, pay $200 for the delivery of his luggage and lost his camera. He wrote a 722 nor a tracer telex received from its Vienna Station. It, however, contended
demand letter to PAL asking for payment of the lost camera and other expenses. He then that if at all liable its obligation is limited by the Warsaw Convention rate.
filed a case for damage in the CFI of Makati. RTC ruled in Miano’s favour (Moral and  PAL filed a Third-Party Complaint against Lufthansa German Airlines,
exemplary damage; as well as attorney’s fees were awarded). but was dismissed for failure to prosecute.
 RTC, although no bad faith from PAL, ruled in favor of Miano plus $200 for
ISSUE: Whether or not the trial court erred in awarding damages to Miano.
traspo of bags, 40,000 for moral damage, 20,000 exemplary and 15,000 as
attorney’s fees.
Yes, ERRED. In breach of contract of carriage by air, moral damages are awarded only if
the defendant acted fraudulently or in bad faith. The facts evince that PAL’s late
delivery of the baggage for eleven (11) days was not motivated by ill will or bad
ISSUE:
faith. PAL coordinated immediately to locate the luggage and its Manager testified that
W/N the court erred in awarding respondent damages. Yes.
the Manila station did not receive any tracer telex. Without the tracer telex, the color
and the type of baggage are used as basis for the matching. Thus, the delay. The
HELD:
trial court made an unequivocal conclusion that petitioner did not act in bad faith or
IN VIEW WHEREOF, the assailed Decision of July 29, 1992 is MODIFIED deleting the
with malice. The grant of exemplary damage is likewise not granted because PAL did not
award of moral and exemplary damages and attorney's fees.
act in a wanton, fraudulent, reckless, oppressive, or malevolent manner.
RATIO:
FACTS:
 In breach of contract of carriage by air, moral damages are awarded only
 On August 31, 1988, private respondent took PAL flight PR 722, Mabuhay Class,
if the defendant acted fraudulently or in bad faith.
bound for Frankfurt, Germany. He had an immediate onward connecting flight via
 Bad faith means a breach of a known duty through same motive of
Lufthansa flight LH 1452 to Vienna, Austria.
interest or ill will.
 At the Ninoy Aquino International Airport, he checked-in one brown suitcase
 The facts evince that PAL’s late delivery of the baggage for eleven
weighing twenty (20) kilograms. He claimed that his suitcase contained money,
(11) days was not motivated by ill will or bad faith.
documents, one Nikkon camera with zoom lens, suits, sweaters, shirts, pants, shoes,
 It immediately coordinated with its Central Baggage Services to trace
and other accessories.
private respondent's suitcase and succeeded in finding it.
 Upon arrival at Vienna (via Lufthansa), his baggage was missing. He reported the
 At the hearing, PAL's Manager for Administration of Airport Services
matter to the Lufthansa authorities.
Department Miguel Ebio testified that their records disclosed that
 After three (3) hours of waiting in vain, he proceeded to Piestany,
Manila, the originating station, did not receive any tracer telex 1.
Czechoslovakia.
 Tracer telex, containing information about the luggage, is matched with
 Eleven (11) days after or on September 11, 1988, his suitcase was
the tagless luggage for identification.
delivered to him in his hotel in Piestany, Czechoslovakia.
 Upon inquiry from their Frankfurt Station, it was discovered that the
 He claimed that because of the delay in the delivery of his suitcase, he
interline tag of private respondent's baggage was accidentally taken
was forced to borrow money to buy some clothes, to pay $200.00 for
off.
the transportation of his baggage from Vienna to Piestany, and lost
 According to Mr. Ebio, it was customary for destination stations to
his Nikkon camera.
hold a tagless baggage until properly identified.
 Miano wrote to PAL a letter demanding: (1) P10,000.00 cost of lost camera; (2)
$200.00 for alleged cost of transporting luggage from Vienna to Piestany; and
(3) P100,000.00 as damages.
1 A tracer telex, an airline lingo, is an action of any station that the airlines operate from whom
a passenger may complain or have not received his baggage upon his arrival.

 Without the tracer telex, the color and the type of baggage are used as
basis for the matching. Thus, the delay.
 Bad faith must be substantiated by evidence.
 The trial court made an unequivocal conclusion that petitioner did
not act in bad faith or with malice, “Absent a finding as to the bad
intention of defendant (petitioner) PAL, this court finds it
appropriate to apply the Warsaw Convention with respect to the
liability of Air Carriers.”
 In LBC v. CA the Court held that, “Bad faith under the law cannot be
presumed; it must be established by clear and convincing evidence.
Again, the unbroken jurisprudence is that in breach of contract cases
where the defendant is not shown to have acted fraudulently or in
bad faith, liability for damages is limited to the natural and probable
consequences of the breach of the obligation which the parties had
foreseen or could reasonably have foreseen. The damages, however,
will not include liability for moral damages.”
 The Court cannot sustain the award of exemplary damages
 The prerequisite for the award of exemplary damages in cases of
contract or quasi-contract is that the defendant acted in wanton,
fraudulent, reckless, oppressive, or malevolent manner.
 The undisputed facts do not so warrant the characterization of the
action of petitioner
 Attorney’s fees likewise has no legal leg to stand on
 The fact that Mian was compelled to litigate and incur expenses to
protect and enforce his claim did not justify the award of attorney's
fees.
 The general rule is that attorney's fees cannot be recovered as part of
damages because of the policy that no premium should be placed on
the right to litigate.
 PAL is willing to pay the just claim of $200.00 as a result of the delay
in the transportation of the luggage in accord with the Warsaw
Convention. Needless to say, the award of attorney's fees must be
deleted where the award of moral and exemplary damages are
eliminated.
6 TAN V. NORTHWEST AIRLINES, INC., 327 SCRA 263 –BASCARA
Common Carrier Northwest Airlines
Passenger Priscilla Tan and Connie Tan
Problem Upon arrival in PH, TANs found out that their baggage was missing.
When finally recovered, some items were destroyed and soiled. CA
partially affirmed the lower court’s decision by deleting moral
and exemplary damages
07 Transpo Compiled Digests. Week 8. Atty. Ampil 3C 9
2015.
Who Won Northwest Airlines is not liable for moral and exemplary
damages. Award of attorney’s fees deleted.
Emergency Recitation:
On May 31, 1994, Priscilla Tan and Connie Tan boarded a Northwest Airlines plane in
Chicago bound to the Philippines with a stop-over at Detroit. Upon their arrival, they
found out that their baggage was missing. On June 3, they recovered the baggage
and discovered that some were destroyed and soiled. They filed an action for
damages, claiming that they suffered mental anguish, sleepless nights and great damage.
Northwest offered to reimburse the cost of repairs of the bags or purchase price of new
bags. The trial court awarded actual, moral and exemplary damages, and also
attorney’s fees. The Court of Appeals partially affirmed the decision by deleting
moral and exemplary damages. Hence, Tan filed this instant petition.
Issue: Whether respondent Airline is liable for moral and exemplary damages for
willful misconduct and breach of contract of carriage- NO.
For willful misconduct to exist there must be a showing that the acts complained
of were impelled by an intention to violate the law, or were in persistent
disregard of one's rights. It must be evidenced by a flagrantly or shamefully wrong or
improper conduct. Contrary to Priscilla's contention, there was nothing in the conduct
of Northwest Airlines which showed that they were motivated by malice or bad
faith in loading her baggages on another plane. Where in breaching the contract of
carriage the defendant airline is not shown to have acted fraudulently or in bad faith,
liability for damages is limited to the natural and probable consequences of the breach
of obligation which the parties had foreseen or could have reasonably foreseen. In that
case, such liability does not include moral and exemplary damages.
FACTS:
 On May 31, 1994, Priscilla L. Tan and Connie Tan boarded Northwest Airlines Flight
29 in Chicago, U. S. A. bound for the Philippines, with a stop-over at Detroit, U. S. A.
They arrived at the Ninoy Aquino International Airport (NAIA) on June 1, 1994 at
about 10:40 PM
 Upon their arrival, Priscilla and her companion Connie found that their baggages
were missing. They returned to the airport in the evening of the following day and
they were informed that their baggages might still be in another plane in Tokyo,
Japan.
 On June 3, 1994, they recovered their baggages and discovered that some of its
contents were destroyed and soiled.
 Claiming that they "suffered mental anguish, sleepless nights and great damage"
because of Northwest's failure to inform them in advance that their baggages would
not be loaded on the same flight they boarded and because of their delayed arrival,
they demanded from Northwest Airlines compensation for the damages they

suffered. On June 15, 1994 and June 22, 1994, Priscilla sent a demand letter to
Northwest Airlines, but the latter did not respond. Hence, the filing of the case with
the regional trial court.
 In its answer to the complaint, respondent Northwest Airlines did not deny that the
baggages of Connie and Priscilla were not loaded on Northwest Flight 29. Their
baggages could not be carried on the same flight because of "weight and balance
restrictions." However, the baggages were loaded in another Northwest Airlines
flight, which arrived in the evening of June 2, 1994.
 When Priscilla received her baggages in damaged condition, Northwest offered to
either (1) reimburse the cost or repair of the bags; or (2) reimburse the cost for the
purchase of new bags, upon submission of receipts.
 After due trial, on June 10, 1996, the trial court rendered decision finding
respondent Northwest Airlines, Inc. liable for damages, as follows:
o Actual Damages- P15,000
o Moral Damages- P100,000
o Exemplary Damages- P50,000
o Attorney’s Fees- P30,000
o Costs
 Respondent Northwest Airlines, Inc. appealed from the trial court's decision to the
Court of Appeals contending that the court a quo erred in finding it guilty of breach
of contract of carriage and of willful misconduct and awarded damages which had
no basis in fact or were otherwise excessive.
 On September 30, 1998, the Court of Appeals promulgated its decision partially
granting the appeal by deleting the award of moral and exemplary damages and
reducing the amount of attorney's fees to P10,000.
ISSUE: Whether or not Northwest Airlines is liable for moral and exemplary damages for
willful misconduct and breach of the contract of air carriage
HELD: Northwest Airlines is not liable for moral and exemplary damages. Award
of attorney’s fees deleted.
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RATIO:
o "For willful misconduct to exist there must be a showing that the acts complained of
were impelled by an intention to violate the law, or were in persistent disregard of
one's rights. It must be evidenced by a flagrantly or shamefully wrong or improper
conduct.
o Contrary to Priscilla's contention, there was nothing in the conduct of Northwest
Airlines which showed that they were motivated by malice or bad faith in loading
her baggages on another plane. Due to weight and balance restrictions, as a safety
measure, Northwest Airlines had to transport the baggages on a different flight, but
with the same expected date and time of arrival in the Philippines . As aptly
explained by respondent:
o "To ensure the safety of each flight, Northwest's personnel determine
every flight's compliance with "weight and balance restrictions." They
check the factors like weight of the aircraft used for the flight gas input,
passenger and crew load, baggage weight, all in relation to the wind factor
anticipated on the flight. If there is an overload, i.e., a perceived safety risk,
the aircraft's load will be reduced by off-loading cargo, which will then be
placed on the next available flight."
o It is admitted that Northwest Airlines failed to deliver Priscilla's luggages on time.
However, there was no showing of malice in such failure. By its concern for safety,
Northwest Airlines had to ship the baggages in another flight with same date of
arrival.
o Hence, the Court of Appeals correctly held that respondent did not act in bad faith.
o Bad faith does not simply connnote bad judgment or negligence, it imports a
dishonest purpose or some moral obliquity and conscious doing of a wrong, a
breach of known duty through some motive or interest or ill-will that partakes of
the nature of fraud.
"Where in breaching the contract of carriage the defendant airline is not shown to have
acted fraudulently or in bad faith, liability for damages is limited to the natural and
probable consequences of the breach of obligation which the parties had foreseen or
could have reasonably foreseen. In that case, such liability does not include moral and
exemplary damages."
7 LAGUNA TAYABAS BUS V. CORNISTA, 11 SCRA 181* -RESPICIO
Common Carrier Laguna Tayabas

Passenger Julieta Cornista
Problem Cornista fell when the bus was running at a high speed on a curve
since the right side of the bus is not covered by any bar. CFI awarded
Moral damages coz Bus was recklessly driven and there was no bar
on the right side of the bus to protect passengers.
Who Won Passenger, moral damages should be awarded.
Short case only
Facts
Julieta Cornista, through her parents, sued Tayabas bus in the Court of First Instance of
Leyte for damages arising from breach of contract of carriage, her claim being that, while
a passenger, she sustained physical injuries through the negligence of petitioner and its
driver. Petitioner's principal defense was that Julieta's own negligence was the
proximate cause of her injuries.
ISSUES:
1. WON Tayabas bus and its driver were negligent? YES
2. WON Tayabas bus and its driver were reckless so as to justify award of MORAL
damages? YES
RATIO:
1. ISSUE of Negligence
 the proximate cause of the injuries suffered by plaintiff Julieta Cornista was the
negligence of both the defendant and its driver who, at the time of the incident at
bar, unmindful of the warnings given him by his passengers, recklessly operated
and drove said bus at high speed even on sharp curves of the road. plaintiff Julieta
Cornista was a passenger and from where she fell when said bus was running
at a high speed on a curve, the right side of said bus is not covered nor
protected by any bar to safeguard passengers sitting at the extreme ends of
the seats on the right side from falling therefrom.
 Julieta Cornista was not guilty of negligence. While the Court of Appeals found
her chargeable with contributory negligence because, instead of holding the
hand of her friend Myrna Cruz, who was seated beside her, she should have
held tenaciously on to the bus itself. We believe with said Court that while
such circumstance justifies the reduction of the moral damages awarded by
the Court of origin, it does not justify the exemption from liability of
petitioner herein.
2. ISSUE of Moral Damages
 Regarding petitioner's contention that no award of moral damages should have
been made in favor of the injured passenger, it must be borne in mind that the
court of origin not only found petitioner's driver guilty of reckless driving,
but also found petitioner itself guilty of negligence because "the right side of
said bus is not covered nor protected by any bar to safeguard passengers
07 Transpo Compiled Digests. Week 8. Atty. Ampil 3C 11
2015.
sitting at the extreme ends of the seats on the right side from falling
therefrom."
 Under the provisions of Art. 2220 of the New Civil Code, in cases of breach of
contract (including one of transportation or carriage), either fraud or bad faith, that
is, wanton and deliberately injurious conduct on the part of the carrier is necessary
to justify an award of moral damages. Petitioner's negligence consisting in its
failure to cover the right side of the bus in question with a bar or some other
contrivance to safeguard or protect passengers falls within this category of
misconduct.
8 ARMOVIT V. CA, 184 SCRA 476 –AQUINO
DR. HERMAN ARMOVIT, DORA ARMOVIT AND JACQUELINE ARMOVIT, petitioners,
vs. COURT OF APPEALS, AND NORTHWEST AIRLINES, INC., respondents.
By Alexis Aquino
Common Carrier Northwest Airlines, Inc.
Passenger Armovit Family
Problem On their return trip from Manila to the U.S., Armovits were rudely
informed that they cannot board the plane anymore as it was taking
off already. Flight time entered in their plane tickets was erroneous.
RTC awarded Moral, exemplary, nominal and Attorney’s fees. CA
deleted moral & nominal and reduced exemplary.
Who Won SC: Moral and exemplary damages were awarded, but nominal
remained deleted.
Doctrine: Contract; Air Transportation; Damages; Private respondent committed a
breach of contract which entitles petitioners to moral damages.—The gross negligence
committed by private respondent in the issuance of the tickets with entries as to the
time of the flight, the failure to correct such erroneous entries and the manner by which
petitioners were rudely informed that they were bumped off are clear indicia of such
malice and bad faith and establish that private respondent committed a breach of
contract which entitles petitioners to moral damages.
Emergency Recit: The Armovit family purchased roundtrip US-Manila tickets from
Northwest Airlines. When they arrived at the check-in counter 1 hour and 15 minutes
before departure time, they were informed that the time indicated in their tickets was
wrong. Their plane was about to take off. (Take note: the tickets were confirmed).
Armovit filed a case for damages against the airline. RTC granted the damages. The CA
reduced the amount. Armovits questioned the reduction. The SC held that the gross
negligence of the airline in the issuance of the tickets with erroneous time of flight
is an indication of bad faith and malice. The airline is liable for damages.
Facts:

 The Armovit family decided to spend their Christmas holidays with relatives and
friends in the Philippines.
 They purchased from Northwest Airlines, Inc. at total of 6 round trip airline tickets
from the U.S. to Manila and back.
 Each ticket was in the handwriting of the airline’s tickets sales agent and contains
the following entry:
o “from Manila to Tokyo, NW flight 002, date 17 January, time 10:30 A.M.
Status, OK.”
 On their return trip from Manila to the U.S., Armovit arrived at the check-in counter
in Manila International Airport one hour and fifteen minutes ahead of the 10:30
A.M. scheduled flight time. The Armovits were rudely informed that they cannot
be accommodated inasmuch as Flight 002 scheduled at 9:15 a.m. was already
taking off and the 10:30 A.M. Flight time entered in their plane tickets was
erroneous.
 Previous to the said date of departure petitioners re-confirmed their reservations
through their representative Ernesto Madriaga. The departure time in the tickets
was not changed when re-confirmed.
 Dr. Armovit protested in extreme agitation that because of the bump-off he will not
be able to keep his appointments with his patients in the U.S.
 The Armovits filed an action for damages in the Regional Trial Court of Manila.
 RTC:
o a)Actual damages in favor of Dr. Herman Armovit in the sum of P1,300.00,
with interest at the legal rate from January 17, 1982;
o b)Moral damages of P500,000.00, exemplary damages of P500,000.00,
and nominal damages of P100,000.00 in favor of Dr. Herman Armovit;
o c)Moral damages of P300,000.00, exemplary damages of P300,000.00, and
nominal damages of P50,000.00 in favor of Mrs. Dora Armovit;
o d)Moral damages of P300,000.00, exemplary damages of P300,000.00,
and nominal damages of P50,000.00 in favor of Miss Jacqueline Armovit;
and
o e)Attorney’s fees of 5% of the total awards under the above paragraphs.
 CA:
o On the allowance of damages, the trial court has discretion to grant and fix
the amounts to be paid the prevailing party. In this case, there was gross
negligence on the part of defendant-appellant in reconfirming the time
and date of departure of Flight No. 002
o However, We modify the allowance of the other awards made by the trial
court.
o The moral damages of P900,000.00 awarded to Appellees must be
eliminated considering that the appellees did not take the witness stand
to testify on their “social humiliation, wounded feelings and anxiety” and
the breach of contract was not malicious or fraudulent.
o We reduce the award of exemplary damages from P500,000.00 to
P100,000.00 (each).
07 Transpo Compiled Digests. Week 8. Atty. Ampil 3C 12
2015.
o The award of nominal damages has to be eliminated since we are
already awarding actual loss. Nominal damages cannot co-exist with
actual or compensatory damages
Issue: Whether or not the CA erred in reducing the damages to be awarded to the
Armovits.
Held: Yes. Petition is GRANTED.
Ratio:
 In a string of cases, this Court awarded damages for the gross negligence of the
airline which amounted to malice and bad faith and which tainted the breach of air
transportation contract.
 In Air France, this Court observed:
o “A contract to transport passengers is quite different in kind and degree
from any other contractual relation. And this, because of the relation
which an air carrier sustains with the public. Its business is mainly with
the traveling public. It invites people to avail of the comforts and
advantages it offers. The contract of air carriage, therefore, generates a
relation attended with a public duty. Neglect or malfeasance of the
carrier’s employees, naturally, could give ground for an action for
damages.
o “Passengers do not contract merely for transportation. They have the
right to be treated by the carrier’s employees with kindness, respect,
courtesy and due consideration. They are entitled to be protected
against personal misconduct, injurious language, indignities and abuses
from such employees. So it is, that any rude or discourteous conduct on
the part of employees towards a passenger gives the latter an action for
damages against the carrier.”
 The gross negligence committed by private respondent in the issuance of the
tickets with entries as to the time of the flight, the failure to correct such
erroneous entries and the manner by which petitioners were rudely informed
that they were bumped off are clear indicia of such malice and bad faith and
establish that private respondent committed a breach of contract which
entitles petitioners to moral damages.
 The appellate court observed that the petitioners failed to take the witness stand
and testify on the matter. It overlooked however, that the failure of the petitioner to
appear in court to testify was explained by them.
o The assassination of Senator Benigno Aquino, Jr. on August 21, 1983
following the year they were bumped off caused a turmoil in the country.
This turmoil spilled over to the year 1984 when they were scheduled to
testify. However, the violent demonstrations in the country were
sensationalized in the U.S. media so petitioners were advised to refrain
from returning to the Philippines at the time.

 Nevertheless, Atty. Raymund Armovit, brother of petitioner Dr. Armovit, took the
witness stand as he was with the petitioners from the time they checked in up to
the time of their ultimate departure. He was a witness when the check-in officer
rudely informed the petitioners that their flight had already taken off.
o No doubt Atty. Raymund Armovit’s testimony adequately and
sufficiently established the serious anxiety, wounded feelings and
social humiliation that petitioners suffered upon having been
bumped off.
 However, considering the circumstances of this case whereby the private
respondent attended to the plight of the petitioners, taking care of their
accommodations while waiting and boarding them in the flight back to the U.S. the
following day, the Court finds that the petitioners are entitled to moral damages in
the amount of P100,000.00 each.
 By the same token to provide an example for the public good, an award of
exemplary damages is also proper.
The deletion of the nominal damages by the appellate court is well-taken since there is
an award of actual damages. Nominal damages cannot co-exist with actual or
compensatory damages.
9 TRANS WORLD AIRLINES V. CA, 165 SCRA 143 –BENEDICTO
Trans World Airlines vs. CA and Rogelio Vinluan
G.R. No. 78656 August 30, 1988
Common Carrier Trans World Airlines (TWA)
Passenger Rogelio Vinluan (at that time senior partner in ACCRA. Now he
serves as of counsel and teaches at ALS)
Problem Vinluan has a confirmed first class ticket from JFK-SFO.
Downgraded from 1st class to economy. TWA employee arrogantly
threatened Vinluan .
Who Won Vinluan
Damages Difference in fare, moral and exemplary.
Emergency Recit:
Atty. Vinluan purchased first class tickets in Manila from Japan Airlines (and for airlines
that it represent) for trips to Europe and US. In his JFK-SFO leg, his ticket was twice
confirmed and yet TWA abruptly told Vinluan that there were no longer any
available seats in the first class and that he will be downgraded to the economy
class.
When he protested, an employee of TWA arrogantly threatened the him.
In addition, he also saw that several Caucasians who arrived much later were
accommodated in the first class when the other passengers did not show up.
Vinluan sued TWA for damages.
07 Transpo Compiled Digests. Week 8. Atty. Ampil 3C 13
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Issue: Whether TWA is liable for moral and exemplary damages. YES, but reduced.
Held: The Court held that TWA is liable for moral and exemplary damages. The
discrimination in this case is obvious and the humiliation brought Vinluan is
indisputable. TWA showed lack of care in accommodating the passenger in the
class that the latter contracted. In addition, TWA through its agent, rudely
informed Vinluan of such downgrading of class. Such awarding of damages would
serve as an example and a discouragement to carriers who may repeat such oppressive
and discriminatory acts.
COMPLETE
Facts:
 Rogelio A. Vinluan is a lawyer who had to travel in April, 1979 to several cities in
Europe and the U.S. to attend to some matters involving several clients. He entered
into a contract for air carriage for valuable consideration with Japan Airlines first
class from Manila to Tokyo, Moscow, Paris, Hamburg, Zurich, New York, Los Angeles,
Honolulu and back to Manila thru the same airline and other airlines it represents
for which he was issued the corresponding first class tickets for the entire trip.
 While in Paris, he went to the office of Trans World Airlines (TWA) at the De Gaulle
Airport and secured confirmed reservation for first class accommodation on board
its Flight No. 41 from New York to San Francisco.
o A validated stub was attached to the New York-Los Angeles portion of his ticket
evidencing his confirmed reservation for said flight with the mark "OK " Vinluan
reconfirmed his reservation for first class accommodation on board TWA Flight
No. 41 with its New York office.
o He was advised that his reservation was confirmed. He was even requested to
indicate his seat preference on said flight on said scheduled date of departure of
TWA Flight No. 41.
o Vinluan presented his ticket for check-in at the counter of TWA at JFK
International Airport (New York) at about 9:45 o'clock A.M., the scheduled
time of the departure being 11:00 o'clock A.M.
o He was informed that there was no first class seat available for him on the
flight. He asked for an explanation but TWA employees on duty declined to give
any reason.
o When he began to protest, one of the TWA employees, a certain Mr. Braam,
rudely threatened him with the words "Don't argue with me, I have a very
bad temper."
 Vinluan was compelled to take the economy seat offered to him and he was issued a
refund application as he was downgraded from first class to economy class. While
waiting for the departure of Flight No. 41, Vinluan noticed that other passengers
who were white Caucasians and who had checked-in later than him were given
preference in some first-class seats which became available due to "no show"
passengers.
 Vinluan filed an action for damages against the TWA in the CFI of Rizal alleging
breach of contract and bad faith.
 CFI RULING: decision in favor of Vinluan and holding TWA liable for the amount

representing the difference in fare between first class and economy class
accommodations, the amount of P500,000.00 as moral damages, the amount of
P300,000.00 as exemplary damages, and the amount of P100,000.00 as and for
attorney's fees, all such amounts to earn interest at the rate of 12% per annum from
February 15, 1980 when the complainant was filed until fully paid.
 TWA appealed to the CA. CA modified the decision by (1) fixing the interest on the
awards of moral and exemplary damages at 6% per annum from the date of the
decision a quo, March 8, 1984 until date of full payment and (2) reducing the
attorney's fees to P50,000.00 without interest, the rest of the decision is affirmed.
Cost against appellant. Hence, the petition for review.
ISSUE: Whether the award for moral and exemplary damages is proper. - YES but
reduced.
HELD: SC modified amount for moral damages and reduced to P300,000.00, and the
exemplary damages should be reduced to P200,000.00. All other things affirmed.
RATIO:
 The petition is devoid of merit. Vinluan had a first class ticket for Flight No. 41 of
petitioner from New York to San Francisco. It was twice confirmed and yet TWA
unceremoniously told him that there was no first class seat available for him and
that he had to be downgraded to the economy class.
 As he protested, he was arrogantly threatened by one Mr. Braam. Worst still, while
he was waiting for the flight, he saw that several Caucasians who arrived much later
were accommodated in first class seats when the other passengers did not show up.
 The discrimination is obvious and the humiliation to which Vinluan was
subjected is undeniable. The award of moral and exemplary damages by the
CA in order.
 TWA had shown that the alleged switch of planes from a Lockheed 1011 to a smaller
Boeing 707 was because there were only 138 confirmed economy class passengers
who could very well be accommodated in the smaller plane and not because of
maintenance problems. TWA sacrificed the comfort of its first class passengers
including Vinluan for the sake of econonmy.
 Such inattention and lack of care for the interest of its passengers who are entitled to
its utmost consideration, particularly as to their convenience, amount to bad faith
which entitles the passenger to the award of moral damages. More so in this case
where instead of courteously informing the passenger of his being downgraded
under the circumstances, he was angrily rebuffed by an employee of
petitioner.
 At the time of the incident, Vinluan was a practicing lawyer, a senior partner of a big
law firm in Manila (ACCRA). He was a director of several companies and was active
in civic and social organizations in the Philippines.
 Considering the circumstances of this case and the social standing of private
respondent in the community, he is entitled to the award of moral and
exemplary damages.
 However, the moral damages should be reduced to P300,000.00, and the
exemplary damages should be reduced to P200,000.00. This award should be
reasonably sufficient to indemnify Vinluan for the humiliation and embarrassment
that he suffered and to serve as an example to discourage the repetition of similar
07 Transpo Compiled Digests. Week 8. Atty. Ampil 3C 14
2015.
oppressive and discriminatory acts.
10 ALITALIA AIRWAYS, INC. V. CA, 187 SCRA 763 –CHAN
ALITALIA AIRWAYS, petitioner, vs. COURT OF APPEALS, and SPS. JOSE O. JULIANO and
VICTORIA JULIANO, respondents. G.R. No. 77011, July 24, 1990
Common Carrier Alitalia Airways
Passenger Spouses Juliano
Problem Alitalia left Spouses Juliano at Rome even though they paid for the
tickets
Who Won Passenger Spouses Juliano
EMERGENCY RECIT
 Spouses Juliano arrived at the Fumicino Airport in Rome, Italy in order to board
Flight AZ 1774 of Alitalia Airways heading for Hong Kong. However, the plane left
without the Julianos.
 Alitalia claimed that boarding time was at 9:30am and the Julianos were a NO
SHOW.
 Julianos claim that they left their hotel at 6:30am and arrived at the airport at 9:15.
Julianos had to contend with the long line at the check-in counter.
 At first, they went to the lady in front in order to say that they really need to board
the plane. Lady ordered them to get back in line. They tried approaching again but
same thing happened. Then, they met another Filipino who was an employee of the
UP Asian Institute of Tourism. They approached a supervisor of Alitalia but the
latter merely shrugged.
 At court, it was found that it is the practice of airlines to overbook their planes in
order to make sure all its seats would be filled. As a consequence of this practice,
passengers would be bumped off.
 Trial court found Alitalia liable for damages. CA affirmed but modified damages.
 Alitalia questions the award of damages but Julianos contend that the award
is inadequate. Hence, both appeal to the SC.
ISSUE – WON there is legal basis for the award of moral and exemplary damages. YES!!!
AS TO THE DAMAGES (since this case was listed under damages in the syllabus)
- As to the Moral Damages
o The inattention to and lack of care [by the petitioner airline] for the
interest of its passengers who are entitled to its utmost consideration,
particularly as to their convenience, amount to bad faith which entitles the
passenger to the award of moral damages. Therefore, the SC affirms the
respondent court's award of moral damages at P200.000.00. This award
should be sufficient to indemnify the Julianos for the delay, inconvenience,
humiliation, and embarrassment they suffered.
- As to the Exemplary Damages

o The award of exemplary damages is well-grounded. “We note the
proliferation of similar offenses by international carriers finding their way
to this Court; we have to advocate a punitive stands to stem, if not
totally eliminate, this deplorable tide. In the discretion of the Court, the
award of exemplary damages should be increased to P200,000.00.”
DETAILED DIGEST
FACTS
- Respondents Jose and Victoria Juliano (Julianos) arrived at the Fumicino Airport in
Rome, Italy in order to board Flight AZ 1774 of Alitalia Airways, which is scheduled
to depart for Hong Kong.
- However, plane left without the Julianos. When Jose Juliano arrived in Manila, he
returned to his employer, Bristol-Myers, Inc., of which he was VP for Operations,
the tickets they had purchased. However, the purchase was not refunded by his
office.
- Julianos filed a complaint with the RTC of Quezon City against the Alitalia for
damages from the alleged breach of its contractual obligations when Alitalia failed
to transport Julianos to Hongkong on the Alitalia Flight AZ 1774.
- According to Alitalia
o Boarding time was 9:30am. The check-in counter was then closed and all
confirmed passengers who failed to check-in were marked as NO SHOW in
the airline manifest.
o Thereafter, chance passengers (those without confirmed reservations),
were allowed to board
- According to Julianos
o They left the hotel right after breakfast at 6:30am. They arrived at the
airport at 9:15am.
o Julianos had to contend with a long queue for the check-in because there
were no individual counters specifically for Alitalia passengers
o Realizing that it was already boarding time, Julianos, armed with
confirmed tickets, decided to approach the check-in counter.
o At the counter, the lady employee brushed them aside and ordered them
to fall in line, which they did
o They were getting restless because the lines weren’t moving so they called
the attention of the airline authorities
o To make matters worse, Alitalia began to discriminate. Julianos
noticed that some of the passengers were being escorted ahead of
the line in order to be checked-in. Therefore, they approached the lady
at the counter again to explain that they would miss the flight if they were
not checked in.
o Julianos then ran into Ms Chuchi Estanislao, an employee of the University
of the Philippines Asian Institute of Tourism, who could not also check in.
They approached the Alitalia employee wearing a uniform with the tag
“supervisor.” The supervisor only shrugged when shown the confirmed
tickets.
07 Transpo Compiled Digests. Week 8. Atty. Ampil 3C 15
2015.
- On the witness stand during the hearing at the trial court, Anthony Wong,
commercial manager of Alitalia Airways at Hong Kong, testified that as a matter of
policy Alitalia would not deny to anyone the opportunity to board the airline. It
would be contrary to the profit motive of an airline to fly any plane with vacant
seats. In fact, the reason why even chance passengers are admitted is to fill up all
the seats not taken because of the number of NO SHOW (failure to appear)
passengers with confirmed tickets.
- An airline could overbook itself precisely to ensure that all seats would be
taken and this is what the lower court found with Alitalia. As a consequence,
some of the passengers in Rome has to be "bumped off to accommodate the
passengers embarking at the rest of the leg of the trip. In fact more passengers
were picked up by the same flight as it proceeded to Athens, Bangkok, and then
Hongkong.
- Lower court adjudged Alitalia liable for damages. Alitalia appealed from the
decision of the trial court. The decision reads:
o Actual damages - $2,065.00
o Moral damages – P400,000.00
o Attorney’s fees – P50,000.00
- The said decision was motu proprio amended by the trial court to include:
o Exemplary damages - P50,000.00
- Both parties appealed. CA modified judgment
o Moral damages – reduced to P200,000.00 (from P400,000.00)
o Exemplary damages – reduced to P25,000.00 (from P50,000.00)
o Attorney’s fees – reduced to P30,000.00 (from P50,000.00)
- Alitalia assails the decision of the respondent court on the grounds that the trial
court had erred in awarding actual, moral, and exemplary damages and prays for a
reversal.
- On the other hand, the Julianos question the award as inadequate
ISSUE – WON there is legal basis for the award of moral and exemplary damages. YES!!!
HELD - WHEREFORE, the decision of the respondent court is MODIFIED in that the
petitioner Alitalia Airways is hereby ordered to pay the private respondents Jose O.
Juliano and Victoria G. Juliano the following amounts:
1) U.S.$2,065.00 as actual damages, payable in Philippine Currency at the official rate of
exchange at the time of payment;
2) P200,000.00, as and for moral damages;
3) P200,000.00, as and for exemplary damages; and
4) P30,000.00, as attorney's fees.
Costs against the petitioner.
RATIO
- the Court has consistently affirmed that review of the findings of fact of the Court of
Appeals is not a function that it ordinarily undertakes such findings being binding
and conclusive

- It is true that certain exceptions have become familiar. However nothing in the
records warrants a review based on any of these well-recognized exceptions
- When an airline issues a ticket to a passenger confirmed on a particular flight,
on a certain date, a contract of carriage arises, and the passenger has every
right to expect that he would fly on that flight and on that date. If he does not,
then the carrier opens itself to a suit for breach of contract of carriage.
- The respondent court erred in holding that the Julianos are not entitled to a
refund because the purchase of the Thai Airways tickets was unnecessary.
o “The Julianos did not use their Alitalia tickets but bought passage on Thai
Airways International in order to get to where they were going. The
purchase of tickets on Thai Airways was by calculated choice, not by
necessity. This being the case, since the Julianos could have flown Alitalia
just the same there being no compelling necessity anymore for them to fly
the same day, Our conclusion is that they are not entitled to a refund of
the cost of their Thai tickets.”
- When a passenger contracts for a specific flight he has a purpose in making that
choice which must be respected. This choice, once exercised, must not be impaired
by a breach on the part of the airline without the latter incurring any liability.
Besides, why should the Julianos be compelled to wait for another Alitalia flight to
risk a similar rebuff and suffer the consequent further delay?
- It was already too much of a coincidence that, at Fumicino Airport, the Julianos
would find another Filipino, in the person of Ms. Estanislao, in the same
predicament that they were in. We will no longer go to the extent of indulging in the
conjecture that Ms. Estanislao and the Julianos were singled out to be discriminated
against because of their color.
- What is plain to see is that the airline had deliberately overbooked and in
doing so took the risk of having to deprive some passengers of their seats in
case all of them would show up for check-in.
- Because the passengers in a contract of carriage do not contract merely for
transportation, they have a right to be treated by the carrier's employees with
kindness, respect, courtesy, and consideration. Hence the justification why
passengers must be spared from the indignity and inconvenience of being
refused a confirmed seat on the last minute.
AS TO THE DAMAGES (since this case was listed under damages in the syllabus)
- As to the Moral Damages
o In Trans World Airlines v. Court of Appeals, such inattention to and lack of
care [by the petitioner airline] for the interest of its passengers who are
entitled to its utmost consideration, particularly as to their convenience,
amount to bad faith which entitles the passenger to the award of moral
damages.
o Ergo, we affirm the respondent court's award of moral damages at
P200.000.00. This award should be sufficient to indemnify the
Julianos for the delay, inconvenience, humiliation, and
embarrassment they suffered.
- As to the exemplary damages
07 Transpo Compiled Digests. Week 8. Atty. Ampil 3C 16
2015.
o The award of exemplary damages is well-grounded.
o With dismay, we note, that the imposition of substantial amounts of
damages notwithstanding, international carriers have not been dissuaded
from repeating similar derogatory acts.
o Nonetheless, we agree with the injunction expressed by the Court of
Appeals that passengers must not prey on international airlines for
damage awards, like "trophies in a safari." After all neither the social
standing nor prestige of the passenger should determine the extent to
which he would suffer, because of a wrong done, since the dignity
affronted in the individual is a quality inherent in him and not conferred
by these social indicators
Nevertheless we have noted the proliferation of similar offenses by international
carriers finding their way to this Court; we have to advocate a punitive stands to
stem, if not totally eliminate, this deplorable tide. In the discretion of the Court,
the award of exemplary damages should be increased to P200,000.00.
11 PAL V. CA, 188 SCRA 461 –CORTEZ
Philippine Airlines vs Court of Appeals (188 SCRA 461, Aug. 13, 1990)
Common Carrier Philippine Airlines
Passenger Adelina Bagadiong and Rosario Sto. Tomas (case 1); Ladislao Santos
(case 2)
Problem The "bumping off" the passengers from their flight by PAL
employees
Who Won Passengers
DOCTRINE:
 Moral damages are recoverable in a breach of contract of carriage when the air
carrier through its agents acted fraudulently or in bad faith.
o Inattention and lack of care on the part of the carrier resulting in the
failure of the passengers to be accommodated in the class contracted for
amounts to bad faith or fraud which entitles the passengers to the award
of moral damages in accordance with Article 2220 of the Civil Code
 Neglect or malfeasance of the carrier’s employee naturally could give ground for an
action for damages. The operation of a common carrier is business affected with
public interest and must be directed to serve the comfort and convenience of the
passengers. In case of breach in bad faith of a contract of carriage, award of
damages is in order.
 Exemplary damages may be awarded even though not so expressly pleaded in the
complaint nor proved.

 Awards for moral and exemplary damages, as well as attorney’s fees are left to the
sound discretion of the court. Such discretion, if well exercised, will not be
disturbed on appeal.
EMERGENCY DIGEST:
Two consolidated cases for damages against PAL were filed in CFI Camarines Sur. In the
first case, the passengers bought from PAL Naga branch 2 roundtrip tickets (Naga-
Manila) for Nov 26. PAL issued the tickets and expressly reserved their seats. Their
luggages were checked in and PAL employees got the passengers’ tickets so boarding
passes can be given. However, a few minutes after the flight, their tickets were never
returned. The passengers were not allowed to board the flight so plane took off without
them (their luggage was in the plane). Despite their complaints, the PAL employees
merely refunded them of the fare. The passengers sued for damages.
In the second case, the passenger also bought a ticket and was already reserved for the
Nov 26 flight to Naga-Manila. His luggage was already checked in. The PAL employees
also got his ticked so a boarding pass may be issued his ticket was returned but he was
informed there were no more seats available so he cannot ride that certain flight.
CFI ruled in favor of the passengers in both cases filed and awarded them actual, moral,
and exemplary damages. CA affirmed CFI ruling.
Issues are: W/N there is bad faith in the breach of contract (YES); and W/N exemplary
damages were proper.
SC held: CA ruling is AFFIRMED. Inattention and lack of care on the part of the carrier
resulting in the failure of the passengers to be accommodated in the class contracted for
amounts to bad faith or fraud which entitles the passengers to the award of moral
damages in accordance with Article 2220 of the Civil Code. In this case, PAL employees
knew that the flight to Manila was full yet they still overbooked the said flight. They also
entertained certain politicians to cater to its good graces despite knowing that they will
most likely refuse to deplane. The imposition of exemplary damages is necessary to
deter PAL or other airlines from committing similar breaches of contract in the future,
although there are still reported instances thereof. The findings that PAL had breached
its contract of carriage in bad faith and in wanton disregard of private respondents'
rights as passengers by bumping them off lay the basis and justification for such awards.
FACTS:
Two civil cases for damages were filed before the Court of First Instance Camarines Sur
and were consolidated.
FIRST CASE:
 On Nov 16, 1970, private respondents Adelina Bagadiong and Rosario Sto. Tomas
(PASSANGERS) made reservation and bought 2 Philippine Airlines (PAL) roundtrip
tickets from their Naga branch for a Naga-Manila flight scheduled on November 26.
 On November 24, they went back to the Naga branch and paid for the tickets.
07 Transpo Compiled Digests. Week 8. Atty. Ampil 3C 17
2015.
o The 2 tickets were issued and their reservation was expressly confirmed
in the Nov 26 flight departing at 3:40pm
 45 minutes before their departure time, the passengers checked in at PAL’s airport
counter
o PAL’s agents or employees got the passengers’ tickets allegedly for the
purpose of issuing them a boarding pass
o A few minutes before departure time, passengers’ luggage were already
loaded in the plane but their tickets were not returned to them
 Thus, they were not allowed by the defendants to board the
flight
 The plane took off with their luggage
 Despite their complaint, what PAL’s agents or employees did at the Naga branch
was to merely refund their fares.
 In their complaint, the passengers contend that PAL acted in bad faith in its breach
of contract. They claimed for moral, exemplary and actual damages.
SECOND CASE:
 On Nov 24, 1970, private respondent Ladislao Santos (PASSENGER) bought a plane
ticket from PAL Naga branch for Flight 296 from Naga-Manila scheduled on Nov 26.
o he was assured by PAL’s employees that his reservation was confirmed
 At 2pm2, or about 1 hour 40mins before departure time, the passenger checked-in
at the airport counter and the PAL employees asked for his ticket for the purpose of
issuing a boarding pass
o Around 3mins before departure, his ticket was returned BUT was
informed there were no more seats available so he cannot ride that flight
to Manila
o Employees acted rudely and discourteously which caused him
embarrassment
 It was important for the passenger to get to Manila at Nov 26 due to an
appointment with an eye specialist, and to close a contract to supply shrimps to
some restaurants and market vendors in Manila (he failed to close the contract)
 He reached Manila by train on Dec 1.
 The passenger claimed that PAL acted in bad faith in its breach of contract. He
claimed for moral, exemplary and actual damages.
PAL’S ANSWER (in both complaints):
 Aircraft used was a 44-seater
 that due to the cancellation of its morning flight from Virac, some of its passengers
for said flight took Flight 296R;
 employees at its Virac station were constrained "to allow Governor Alberto of
Catanduanes to take Flight 296 together with several companions" with the
assurance that two 2 companions would deplane in Naga
2 Just in case sir asks: The 2 case says that the flight was on Nov 26, but is also said that “around
nd
2pm of Nov 29, about an hour before departure...”. I think Nov 29’s a typo and the real flight sched
is on Nov 26. Because it was emphasized that the passenger needed to get to Manila on Nov 26.

o the 2 companions of the Governor refused to deplane despite repeated
pleas and entreaties of its employees;
 that the employees were unable to persuade the persons to
deplane in Naga and were compelled by a reasonable and well-
grounded fear that something bad might happen if they force
them to leave
 that the error of its employees was an honest mistake or constitutes excusable
negligence.
The Court of first instance ruled in favor of the passengers (complainants in both cases):
 there was a contract of carriage
 said contract was breached and it was attended by bad faith
 actual, moral, and exemplary damages, as well as attorney’s fees were granted
Upon Motion for reconsideration by the parties, the award for damages were increased
Court of Appeals affirmed the lower court’s decision
ISSUE:
1) whether or not there was bad faith in the breach of contract, enabling the
passengers to claim moral damages (YES, there was bad faith so passengers are
entitled to moral damages)
2) whether or not award for exemplary damages was proper (YES, entitled to both)
HELD: CA decision is AFFIRMED
RATIO:
We have constantly ruled in a number of cases that moral damages are recoverable in
a breach of contract of carriage where the air carrier through its agents acted
fraudulently or in bad faith.  other contractual relation. And this, because of the relation which an air-carrier with
 In the case at bar, the trial court and the CA are in agreement that petitioner
through its agents acted in bad faith in "bumping off" private respondents
passengers.
As aptly found by the CA, PAL’s failure to accommodate the said passengers was not the
result of an honest mistake, because its employees knew and were aware that what they
were doing was wrong.
 Hence, CA held that there was a "dishonest purpose" and "conscious doing of
wrong" on the part of PAL's employees in "bumping off" the passengers from the
flight;
o and that the lower court did not err in holding that the failure of PAL to
accommodate private respondents on Flight 296R was attended by bad
faith
07 Transpo Compiled Digests. Week 8. Atty. Ampil 3C 18
2015.
The PAL employees knew that there was a heavy booking of passengers on November
26, 1970 because of the coming of the Pope. Why did the Virac station overbooked 2
passengers, Gov. Alberto and Mayor Antonio, on Flight 296R, knowing all the time that
these two passengers could not possibly obtain confirmed reservations in Naga?
 Knowing further the political stature of Gov. Alberto, Mr. Borjal, the branch
supervisor of Virac, should had foreseen that should the politicians refuse to
deplane in Naga, should they failed to obtain confirmed reservations he, (the
supervisor) would create a situation wherein the PAL would be placed in a position
to violate its contract of carriage with passengers with confirmed reservations who
would not be accommodated because of the said politicians.
o This whole incident could have been avoided had Borjal not recklessly
took a chance on the two overbooked passengers in getting confirmed
reservation in Naga.
At Pili airport, knowing already that Flight 296R was overbooked by two passengers and
the allocations in Legaspi and Naga were also fully booked of passengers with confirmed
reservations and the passengers were begging and pleading to be allowed to take Flight
296R as they had confirmed reservations and the luggage of Mrs. Bagadiong and Miss
Sto. Tomas were already loaded in the plane, PAL still allowed and gave preference to
the two other passengers to board the plane
 The employees of the defendant knowingly and deliberately disregarded the rights
of the private respondents passengers to board the plane by virtue of their being
holders of tickets duly issued and paid for with confirmed reservations.
o The PAL employees knew that by not allowing the plaintiffs to take Flight
296R they were violating the contract of carriage
o Even granting all the mistakes advanced by the defendant, still there
would at least be negligence so gross and reckless that it amounts to
malice or bad faith in its breach of contract with the passengers
A contract to transport passengers is quite different in kind and degree from any
the public. Its business is mainly with the travelling public. Neglect or malfeasance of
the carrier's employees naturally could give ground for an action for damages. 
In case of breach in bad faith of a contract of carriage, award of damages is in order. We
have ruled that bad faith which would justify an award of moral and exemplary
damages for breach of contract of carriage means a breach of a known duty
through some motive of interest or ill-will.
Inattention and lack of care on the part of the carrier resulting in the failure of the
passengers to be accommodated in the class contracted for amounts to bad faith or
fraud which entitles the passengers to the award of moral damages in accordance with
Article 2220 of the Civil Code (Ortega vs Lufthansa German Airlines).
The amount of exemplary damages need not be pleaded in the complaint because
the same cannot be predetermined. One can merely ask that it be determined by the

court as the evidence may warrant and be awarded at its discretion. Awards for moral
and exemplary damages, as well as attorney's fees are left to the sound discretion
of the court. Such discretion, if well exercised, will not be disturbed on appeal.
 The imposition of exemplary damages is necessary to deter PAL or other airlines
from committing similar breaches of contract in the future, although there are still
reported instances thereof.
We, therefore, find no error on the part of respondent Court of Appeals in awarding
moral and exemplary damages as well as attorney's fees. The findings that petitioner
had breached its contract of carriage in bad faith and in wanton disregard of private
respondents' rights as passengers lay the basis and justification for such awards.
*SIDE ISSUE (IN CASE IT WILL BE ASKED)
Whether or not the unlawful acts of the politicians, was a case of caso fortuito (NO)
 The alleged fortuitous event, supposedly consisting of the unlawful acts of Governor
Alberto and Mayor Antonio, is not independent of the will of PAL as politicians to
board Flight 296R in excess of the number of passengers allotted to them and with
full knowledge that the said flight for Manila was fully booked.
 PAL, having unlawfully deprived private respondents passengers of their seats,
without any regard at all to their feelings and convenience just so it could
accommodate other persons who had no better right thereto, cannot now relieve
itself from liability by invoking a fortuitous event, a defense as erroneous as it is
contrived.
12 ZALAMEA V. CA, 228 SCRA 23* -CRUZ NENZO
[G.R. No. 104235. November 18, 1993.] SPOUSES CESAR & SUTHIRA ZALAMEA AND
LIANA ZALAMEA, petitioners, vs. HONORABLE COURT OF APPEALS AND
TRANSWORLD AIRLINES, INC., respondents.
Common Carrier TransWorld Airlines (TWA)
Passenger  Cesar C. Zalamea and
 Suthira Zalamea,
 and their daughter, Liana Zalamea,
Problem the Zalamaeas were denied accommodation to a flight which they
already had confirmed seats for.
Who Won Zalamaeas. Overbooking is a breach of contract of carriage and
amounts to bad faith, entitling the passengers concerned to an
award of moral damages.
07 Transpo Compiled Digests. Week 8. Atty. Ampil 3C 19
2015.
ER
The Zalameas had confirmed tickets from Los Angeles to New York. The same tickets
were reconfirmed 2 days before said flight ( June 4 and June 6 ). However when they
checked in on the flight day (an hour early) they were refused accommodation to TWA
flight 007.
The Zalameas filed an action for damages before the Regional Trial Court. Advocating
Zalameas' position, the trial court categorically ruled that respondent TransWorld
Airlines (TWA) breached its contract of carriage with petitioners and that said breach
was "characterized by bad faith."
On appeal, however, the CA found that while there was a breach of contract on
respondent TWA's part, there was neither fraud nor bad faith because under the Code of
Federal Regulations by the Civil Aeronautics Board of the United States of America it is
allowed to overbook flights.
The SC held however that existing jurisprudence explicitly states that
overbooking is a breach of contract of carriage and amounts to bad faith, entitling
the passengers concerned to an award of moral damages.
Even on the assumption that overbooking is allowed (TWA said it is because
there exist foreign laws that say so: but that was struck down by SC), respondent TWA is
still guilty of bad faith in not informing its passengers beforehand that it could breach
the contract of carriage even if they have confirmed tickets if there was overbooking. It
is evident that petitioners had the right to rely upon the assurance of respondent TWA
that their tickets represented confirmed seats without any qualification.
FACTS :
Petitioners-spouses purchased three (3) airline tickets from respondent TransWorld
Airlines, Inc. for a flight from New York to Los Angeles on June 6, 1984. All three tickets
represented confirmed reservations.
 Cesar C. Zalamea and
 Suthira Zalamea,
 and their daughter, Liana Zalamea,
(trivia alert : The tickets of petitioners-spouses were purchased at a discount of 75%
while that of their daughter was a full fare ticket. )
While in New York, tickets reconfirmed but on day of flight not given seats.
In New York, on June 4, 1984, the Zalameas received notice of the reconfirmation of
their reservations for said flight.
On the appointed date petitioners checked in at 10:00 a.m., an hour earlier than the
scheduled flight at 11:00 a.m. However, they were placed on the wait-list because the

number of passengers who had checked in before them had already taken all the seats
available on the flight.
o (trivia alerts) Liana Zalamea appeared as No. 13 on the wait-list while
the two other Zalameas were listed as "No. 34, showing a party of
two."
o Out of the 42 names on the wait-list, the first 22 names were
eventually allowed to board the flight to Los Angeles, including
petitioner Cesar Zalamea. The two others, on the other hand, at No.
34, being ranked lower than 22, were not able to fly.
o As it were, those holding full-fare tickets were given first priority
among the wait-listed passengers. Mr. Zalamea, who was holding the
full-fare ticket of his daughter, was allowed to board the plane; while
his wife and daughter, who presented the discounted tickets were
denied boarding. According to Mr. Zalamea, it was only later when he
discovered that he was holding his daughter's full-fare ticket.  Break down of (NEW) payments
 
Even in the next TWA flight to Los Angeles Mrs. Zalamea and her daughter, could not be
accommodated because it was also fully booked. Thus, they were constrained to book in
another flight and purchased two tickets from American Airlines at a cost of Nine
Hundred Eighteen ($918.00) Dollars.
07 Transpo Compiled Digests. Week 8. Atty. Ampil 3C 20
2015.
o Since it is a matter of record that overbooking of flights is a common
and accepted practice of airlines in the United States and is
specifically allowed under the Code of Federal Regulations by the
Civil Aeronautics Board, Moreover, while respondent TWA was
remiss in not informing petitioners that the flight was overbooked
and that even a person with a confirmed reservation may be denied
accommodation on an overbooked flight, nevertheless it ruled that
such omission or negligence cannot under the circumstances be
considered to be so gross as to amount to bad faith.
Finally, it also held that there was no bad faith in placing petitioners in the wait-list
along with forty-eight (48) other passengers, where full-fare first class tickets were
given priority over discounted tickets. 
1. US$159.49 : the price of Suthira Zalamea's ticket for TWA Flight
007;
2. US$159.49 : the price of Cesar Zalamea's ticket for TWA Flight 007;
3. P50,000.00 as and for attorney's fees.
4. The costs of suit.

Zalameas File for damages; Breach of CoC; Zalameas WIN: pay tickets and MORAL
+ atty fees. RTC CA SC

Upon their arrival in the Philippines, petitioners filed an action for damages based on : 1. (CA removed) US 1.
 breach of contract of air carriage $918.00 : price of the
 before the Regional Trial Court of Makati, Metro Manila, tickets bought by
Suthira and Liana 2.
 Zalameas WIN Zalamea from
Break down of payments American Airlines, to
1. US $918.00 : price of the tickets bought by Suthira and Liana enable them to fly to 3.
Zalamea from American Airlines, to enable them to fly to Los Los Angeles from New
Angeles from New York City; York City; 4.
2. US $159.49 : representing the price of Suthira Zalamea's ticket for 2. US $159.49 : damages;
TWA Flight 007;  representing the price
3. P8,934.50, the price of Liana Zalamea's ticket for TWA Flight 007; of Suthira Zalamea's
4. 250,000.00, Philippine Currency, as moral damages for all the ticket for TWA Flight
plaintiffs; 007;
5. P100,000.00, Philippine Currency, as and for attorney's fees; and 3. (CA removed)
6. The costs of suit. P8,934.50, the price of
Liana Zalamea's ticket
CA : Cancel Moral damages ; no fraud or bad faith since overbooking is common for TWA Flight 007;
practice. 4. (CA removed)
250,000.00,
Court of Appeals held that moral damages are recoverable in a damage suit predicated Philippine Currency,
upon a breach of contract of carriage only where there is fraud or bad faith. as moral damages
 no fraud nor bad faith could be imputed on respondent TransWorld Airlines. for all the plaintiffs;
US$159.49 : the price of 1.
Suthira Zalamea's ticket
for TWA Flight 007;
US$159.49 : the price of
Cesar Zalamea's ticket
for TWA Flight 007;
P50,000.00 as and for
attorney's fees.
The costs of suit. 2.
3.
4.
5.
US$918.00 the price
of the tickets bought
by Suthira and Liana
Zalamea from
American Airlines,
to enable them to fly
to Los Angeles from
New York City;
P50,000.00 as moral
P50,000.00 as
exemplary damages;
P50,000.00 as
attorney's fees; and
Costs of suit.
 07 Transpo Compiled Digests. Week 8. Atty. Ampil 3C 21
2015.
5. (CA decreased)
P100,000.00, Law Or Regulation Authorizing Overbooking, Not Proved By Mere
Philippine Currency, Testimony Of Respondent's Airline Customer Service Agent.
as and for attorney's
fees; and Respondent TWA relied solely on the statement of Ms. Gwendolyn Lather, its
6. The costs of suit. customer service agent, in her deposition dated January 27, 1986 that the Code
of Federal Regulations of the Civil Aeronautics Board allows overbooking.
 Aside from said statement, no official publication of said code was
Not satisfied with the decision, petitioners raised the case on petition for review on presented as evidence.
certiorari.  Thus, respondent court's finding that overbooking is specifically
allowed by the US Code of Federal Regulations has no basis in fact.
ISSUES
Contract Governed By Laws Of Place Where Executed; Case At Bar.
1. WON there was no fraud or bad faith on the part of respondent TWA
because it has a right to overbook flights. Even if the claimed U.S. Code of Federal Regulations does exist, the same is not
2. WON the CA erred in eliminating the award of exemplary damages. applicable to the case at bar in accordance with the principle of  lex loci contractus which
3. WON the CA erred in not ordering the refund of liana zalamea's twa requires that the law of the place where the airline ticket was issued should be applied
ticket and payment for the american airlines tickets. by the court where the passengers are residents and nationals of the forum and the
ticket is issued in such State by the defendant airline.
HELD  Since the tickets were sold and issued in the Philippines, the applicable law in
this case would be Philippine law.
SIDE STUFF
TOPIC STUFF
Evidence; Foreign Laws, How Proved.
Damages; Overbooking Amounts To Bad Faith Entitling Passengers To Award Of
That there was fraud or bad faith on the part of respondent airline when it did not allow Moral Damages.
petitioners to board their flight for Los Angeles in spite of confirmed tickets cannot be
disputed. Existing jurisprudence explicitly states that overbooking amounts to bad faith, entitling
 The U.S. law or regulation allegedly authorizing overbooking has never been the passengers concerned to an award of moral damages. (Alitalia Airways v. Court of
proved. Appeals, G.R. No. 77011, 187 SCRA 763 [1990]; Korean Airlines Co., Ltd. v. Court of Appeals ,
 Foreign laws do not prove themselves nor can the courts take judicial notice of G.R. No. 61418, 154 SCRA 211 [1987])
them. 5.ID.; ID.; BREACH OF CONTRACT OF CARRIAGE AMOUNTS TO BAD FAITH.
o Like any other fact, they must be alleged and proved.
In fact, existing jurisprudence abounds with rulings where the breach of contract of
o Written law may be evidenced by
carriage amounts to bad faith. (Pan American World Airways, Inc. v. Intermediate
 an official publication thereof or
Appellate Court, G.R. No. 74442, 153 SCRA 521 [1987])
 by a copy attested by the officer having the legal custody of
the record, or by his deputy, and accompanied with a
A contract to transport passengers is quite different in kind and degree from any other
certificate that such officer has custody.
contractual relation. (Zulueta v. Pan American World Airways, Inc., G.R. No. L-28589, 43
o The certificate may be made by a:
SCRA 397 [1972]
 secretary of an embassy or legation,
 consul general, Non-Incorporation Of Stipulations On Overbooking And In Not Informing
 consul, vice-consul, or
Passengers Of Its Policy Giving Less Priority To Discounted Ticket,
 consular agent or Constitute Bad Faith; Passengers Entitled To Both Moral And Exemplary
 by any officer in the foreign service of the Philippines Damages; Case At Bar.
stationed in the foreign country in which the record is kept,
o and authenticated by the seal of his office.

Even on the assumption that overbooking is allowed, respondent TWA is still
guilty of bad faith in not informing its passengers beforehand that it could
breach the contract of carriage even if they have confirmed tickets if there was
overbooking.
o Respondent TWA should have incorporated stipulations on
overbooking on the tickets issued or to properly inform its
passengers about these policies so that the latter would be
prepared for such eventuality or would have the choice to ride
with another airline.
o Moreover, respondent TWA was also guilty of not informing its
passengers of its alleged policy of giving less priority to
discounted tickets.
It is respondent TWA's position that the practice of overbooking and the
airline system of boarding priorities are reasonable policies, which when
implemented do not amount to bad faith.
o But the issue raised in this case is not the reasonableness of said
policies but whether or not said policies were incorporated or
deemed written on petitioners' contracts of carriage.
 Respondent TWA failed to show that there are provisions to
that effect.
 Neither did it present any argument of substance to show
that petitioners were duly apprised of the overbooked
condition of the flight or that there is a hierarchy of
boarding priorities in booking passengers.
It is evident that petitioners had the right to rely upon the assurance of
respondent TWA, thru its agent in Manila, then in New York, that their tickets
represented confirmed seats without any qualification.
o The failure of respondent TWA to so inform them when it could easily
have done so thereby enabling respondent to hold on to them as
passengers up to the last minute amounts to bad faith.
o Evidently, respondent TWA placed its self-interest over the rights
of petitioners under their contracts of carriage. Such conscious
disregard of petitioners' rights makes respondent TWA liable for
moral damages.
EXEMPLARY DAMAGES To deter breach of contracts by respondent
TWA in similar fashion in the future, we adjudge respondent TWA liable
for exemplary damages, as well.
BUT MORAL & EXEMPLARY DAMAGES REDUCEDHowever, the award for
moral and exemplary damages by the trial court is excessive in the light of the
fact that only Suthira and Liana Zalamea were actually "bumped off." An award
of P50,000.00 moral damages and another P50,000.00 exemplary damages
would suffice under the circumstances obtaining in the instant case.
07 Transpo Compiled Digests. Week 8. Atty. Ampil 3C 22
2015.
OTHER DAMAGES STUFF
Passenger Entitled To Reimbursement For Cost Of Tickets Bought For Another
Flight On Another Airline; Case At Bar.
The respondent court erred, however, in not ordering the refund of the cost of the
American Airlines tickets purchased and used by petitioners Suthira and Liana.
 The evidence shows that petitioners Suthira and Liana were constrained
to take the American Airlines flight to Los Angeles not because they
"opted not to use their TWA tickets on another TWA flight" but because
respondent TWA could not accommodate them either on the next TWA
flight which was also fully booked.
o The purchase of the American Airlines tickets by petitioners Suthira
and Liana was the consequence of respondent TWA's unjustifiable
breach of its contracts of carriage with petitioners.
o In accordance with Article 2201, New Civil Code, respondent TWA
should, therefore, be responsible for all damages which may be
reasonably attributed to the non-performance of its obligation.
 In the previously cited case of Alitalia Airways v. Court of Appeals, this Court
explicitly held that a passenger is entitled to be reimbursed for the cost of the
tickets he had to buy for a flight on another airline.
o Thus, instead of simply being refunded for the cost of the unused
TWA tickets, petitioners should be awarded the actual cost of their
flight from New York to Los Angeles.
Attorney's Fees; Recoverable Where A Party Was Compelled To Litigate To Protect
His Rights.
The award to petitioners of attorney's fees is also justified under Article 2208(2) of the
Civil Code which allows recovery when the defendant's act or omission has compelled
plaintiff to litigate or to incur expenses to protect his interest.
WHEREFORE, the petition is hereby GRANTED and the decision of the respondent Court
of Appeals is hereby MODIFIED to the extent of adjudging respondent TransWorld
Airlines to pay damages to petitioners in the following amounts, to wit:
1. US$918.00 the price of the tickets bought by Suthira and Liana Zalamea from
American Airlines, to enable them to fly to Los Angeles from New York City;
2. P50,000.00 as moral damages;
3. P50,000.00 as exemplary damages;
4. P50,000.00 as attorney's fees; and
5. Costs of suit. 
SO ORDERED.

Narvasa, C .J ., Padilla, Regalado and Puno, JJ ., concur.
13 SINGSON V. CA, 282 SCRA 149* -DELA PAZ
CARLOS SINGSON, petitioner, vs. COURT OF APPEALS and CATHAY PACIFIC
AIRWAY, INC., respondents.
Common Carrier Cathay Pacific
Passenger Carlos Singson and cousin Crescintino Tiongson
Problem WON Liable for exemplary and moral damages for failing to book a
return flight?
Who Won Singson – actual, moral, exemplary, atty fees
EMERGENCY DIGEST: Cousins Singson and Tiongson bought CATHAY tickets. On their
return flight, Singson was barred from leaving because the flight coupon 5 was
missing but flight coupon 3 was still attached. The employees of Cathay did not allow
him to leave for Manila. It was only 5 days later that Singson was able to arrange for
a return flight. He is now suing Cathay for damages.
The Supreme Court awarded him moral, exemplary, actual and attorney’s fees.
As the rule now stands, where in breaching the contract of carriage the defendant
airline is shown to have acted fraudulently, with malice or in bad faith, the award
of moral and exemplary damages, in addition to actual damages, is proper.  carriage yet existing such that CATHAY's refusal to immediately book him could not be
However, the P500,000.00 moral damages and P400,000.00 exemplary damages
awarded by the trial court have to be reduced. The well-entrenched principle is
that the grant of moral damages depends upon the discretion of the court based
on the circumstances of each case.  difference, and since 2 and 3 July fell on a weekend, and 4 July was an official holiday,
This discretion is limited by the principle that the "amount awarded should not be
palpably and scandalously excessive" as to indicate that it was the result of
prejudice or corruption on the part of the trial court.
Damages are not intended to enrich the complainant at the expense of the
defendant. They are awarded only to alleviate the moral suffering that the injured
partly had undergone by reason of the defendant's culpable action.   There is not a
hard-and-fast rule in the determination of what would be a fair amount of moral
damages since each case must be governed by its own peculiar facts.
DOCTRINE: The award of damages must be reasonable.
COMPLETE DIGEST:
FACTS: On 24 May 1988 CARLOS SINGSON and his cousin Crescentino Tiongson bought
from Cathay Pacific Airways, Ltd. (CATHAY), at its Metro Manila ticket outlet two (2)
open-dated, identically routed, round trip plane tickets for the purpose of
spending their vacation in the United States.
Each ticket consisted of six (6) flight coupons corresponding to this itinerary:
flight coupon no. 1 — Manila to Hongkong;
flight coupon no. 2 — Hongkong to San Francisco;
flight coupon no. 3 — San Francisco to Los Angeles;
flight coupon no. 4 — Los Angeles back to San Francisco;
07 Transpo Compiled Digests. Week 8. Atty. Ampil 3C 23
2015.
flight coupon no. 5 — San Francisco to Hongkong; and, finally
flight coupon no. 6 — Hongkong to Manila.
The procedure was that at the start of each leg of the trip a flight coupon corresponding
to the particular sector of the travel would be removed from the ticket booklet so that at
the end of the trip no more coupon would be left in the ticket booklet.
On 6 June 1988 CARLOS SINGSON and Crescentino Tiongson left Manila on board
CATHAY's Flight No. 902. On 30 June 1988 they arranged for their return flight at
CATHAY's Los Angeles Office and chose 1 July 1988, a Friday, for their departure.
While Tiongson easily got a booking for the flight, SINGSON was not as lucky.
It was discovered that SINGSON’s ticket booklet did not have flight coupon no. 5
corresponding to the San Francisco-Hongkong leg of the trip. Instead, what was in
his ticket was flight coupon no. 3 — San Francisco to Los Angeles — which was
supposed to have been used and removed from the ticket booklet. It was not until
6 July 1988 that CATHAY was finally able to arrange for his return flight to Manila.
On 26 August 1988 SINGSON commenced an action for damages against CATHAY
before the RTC of Vigan, Ilocos Sur. He was forced to go to San Francisco to investigate
on the coupon or to purchase a new ticket subject to refund if it turned out that the
missing coupon was still unused or subsisting. Cathay had the facilities to check on
the status of the coupon, yet SINGSON AND TIONGSON were forced to go to San
Francisco to verify the missing ticket. CATHAY, allegedly in scornful insolence,
simply dismissed him like an impertinent "brown pest."
CATHAY denied these allegations and since it was an “open-dated” which meant that he
was not booked on a specific flight on a particular date, there was no contract of
construed as breach of contract of carriage. Moreover, the coupon had been missing for
almost a month hence CATHAY must first verify its status. It sent a request by telex on
the same day, 1 July 1988, to its Hongkong Headquarters. However, due to the time
the telex response was not read until 5 July 1988. Lastly SINGSON was the one who
informed CATHAY that he was going to San Francisco.
RTC: Cathay was guilty of gross negligence amounting to malice and bad faith.
 P20,000.00 for actual damages with interest at the legal rate of twelve percent
(12%) per annum from 26 August 1988 when the complaint was filed until
fully paid, 
 P500,000.00 for moral damages, 
 P400,000.00 for exemplary damages, 
 P100,000.00 for attorney’s fees, and, to pay the costs.
CA: reversed the trial court's finding that there was gross negligence amounting to bad
faith or fraud and, accordingly, modified its judgment by deleting the awards for
moral and exemplary damages, and the attorney's fees as well.
Singson now comes to this Court for review. CATHAY guilty of gross negligence
amounting to malice and bad faith in:
(a) detaching the wrong coupon;
(b) using that error to deny confirmation of his return flight; and,

(c) directing petitioner to prematurely return to San Francisco to verify his missing
coupon.
He also underscores the scornful and demeaning posture of CATHAY's employees
toward him.
CATHAY firmly maintains that it did not breach its contract of carriage with
petitioner.
 It argues that it is only when passenger is confirmed on a particular flight
and on a particular date specifically stated in his ticket that its refusal to
board the passenger will result in a breach of contract.
 And even assuming that there was breach of contract, there was no fraud or
bad faith on the part of CATHAY as to justify the award of moral and exemplary
damages plus attorney's fees in favor of petitioner.
ISSUE:
I. WON a breach of contract was committed by CATHAY when it failed to confirm
the booking of petitioner for its 1 July 1988 flight; [YES]
II. WON the carrier was liable not only for actual damages but also for moral and
exemplary damages, and attorney's fees for failing to book petitioner on his
return flight to the Philippines. [YES]
HELD: WHEREFORE, the petition is GRANTED and the 14 July 1994 Decision of the CA is
REVERSED.
RATIO:
I. WON a breach of contract was committed by CATHAY when it failed to confirm
the booking of petitioner for its 1 July 1988 flight; and, (TRANSPO)
CATHAY undoubtedly committed a breach of contract when it refused to confirm
petitioner's flight reservation back to the Philippines on account of his missing flight
coupon. Its contention that there was no contract of carriage that was breached
because petitioner's ticket was open-dated is untenable.
- To begin with, the round trip ticket issued by the carrier to the passenger was
in itself a complete written contract by and between the carrier and the
passenger.
- COMPLETE WRITTEN CONTRACT
(a) the consent of the contracting parties manifested by the fact that the
passenger agreed to be transported by the carrier to and from Los Angeles via
San Francisco and Hongkong back to the Philippines, and the carrier's
acceptance to bring him to his destination and then back home;
(b) cause or consideration, which was the fare paid by the passenger as stated
in his ticket; and,
(c) object, which was the transportation of the passenger from the place of
departure to the place of destination and back, which are also stated in his
ticket.  telex machines and telephones which could facilitate the verification right there at its Los Angeles
In fact, the contract of carriage in the instant case was already partially executed as the
carrier complied with its obligation to transport the passenger to his destination, i.e., Los
Angeles. Only the performance of the other half of the contract — which was to
transport the passenger back to the Philippines — was left to be done. Moreover,
07 Transpo Compiled Digests. Week 8. Atty. Ampil 3C 24
2015.
Timothy Remedios, CATHAY's reservation and ticketing agent, unequivocally testified
that petitioner indeed had reservations booked for travel.
Clearly therefore petitioner was not a mere "chance passenger with no superior right to
be boarded on a specific flight," as erroneously claimed by CATHAY and sustained by the
appellate court.
The loss of the coupon was attributed to the negligence of CATHAY's agents and was the
proximate cause of the non-confirmation of return flight on 1 July 1988. Had CATHAY's
agents been diligent in double checking the coupons they were supposed to detach from
the passengers' tickets, there would have been no reason for CATHAY not to confirm
petitioner's booking as exemplified in the case of his cousin and flight companion
Tiongson whose ticket booklet was found to be in order. Hence, to hold that no
contractual breach was committed by CATHAY and totally absolve it from any liability
would in effect put a premium on the negligence of its agent, contrary to the policy of the
law requiring common carriers to exercise extraordinary diligence.
II. WON the carrier was liable not only for actual damages but also for moral and
exemplary damages, and attorney's fees for failing to book petitioner on his
return flight to the Philippines.
With regard to the second issue, we are of the firm view that the appellate court
seriously erred in disallowing moral and exemplary damages. As the rule now stands,
where in breaching the contract of carriage the defendant airline is shown to have
acted fraudulently, with malice or in bad faith, the award of moral and exemplary
damages, in addition to actual damages, is proper. 
CATHAY’s mistake in removing the wrong coupon was compounded by several other
independent acts of negligence above-enumerated 3. Taken together, they indubitably
3First, as heretofore discussed, the ticket coupon corresponding to the San Francisco-Hongkong
flight was missing either due to the negligence of CATHAY's agents in improperly detaching
petitioner's flight coupons or failing to issue the flight coupon for San Francisco-Hongkong in the
ticket booklet; 
second, petitioner and his cousin presented their respective ticket booklets bearing identical
itineraries to prove that there had been a mistake in removing the coupons of petitioner. CATHAY
apparently ignored the clear evidential import of these facts and peremptorily refused to confirm
petitioner's flight — while ready to confirm his traveling companion's identically routed plane
ticket — on the lame and flimsy excuse that the existence and validity of the missing ticket must
first be verified;
 third, petitioner was directed by CATHAY to go to its San Francisco office and make the necessary
verification concerning the lost coupon himself. This, notwithstanding the fact that CATHAY was
responsible for the loss of the ticket and had all the necessary equipment, e.g., computers, fax and
Office.
It will be observed that CATHAY's Hongkong Office received the telex from Los Angeles on 1 July
1988 at approximately 2:00 a.m. (Hongkong time) and sent out their response only on 2 July 1988
at 12:00 noon. In spite of the fact that they had access to all records and facilities that would enable
them to verify in a matter of minutes, it strangely took them more than twenty-four (24) hours to
 07 Transpo Compiled Digests. Week 8. Atty. Ampil 3C 25
2015.
signify more than ordinary inadvertence or inattention and thus constitute a 14 LAGUNA TAYABAS BUS V. DIASANTA, 11 SCRA 474 –GERALDEZ
radical departure from the extraordinary standard of care required of common
carriers. Put differently, these circumstances reflect the carrier's utter lack of care and LAGUNA-TAYABAS BUS CO., vs. RUFINA DIASANTA, assisted by her husband EVERO
sensitivity to the needs of its passengers, clearly constitutive of gross negligence, TAJADA (1964) - Geraldez
recklessness and wanton disregard of the rights of the latter, acts evidently Common Carrier Laguna-Tayabas Transportation Co. BUS driven by Henry Betito
indistinguishable or no different from fraud, malice and bad faith. Passenger Rufina Diasanta
MORAL AND EXEMPLARY: However, the P500,000.00 moral damages and Problem BUS reckless, jumped up and down so violently that DIASANTA was
P400,000.00 exemplary damages awarded by the trial court have to be reduced. jerked from her seat to the floor with such force that she suffered a
The well-entrenched principle is that the grant of moral damages depends upon fracture in her vertebrae.
the discretion of the court based on the circumstances of each case.  16 This Who Won Passenger, Exemplary damages awarded.
discretion is limited by the principle that the "amount awarded should not be Short case
palpably and scandalously excessive" as to indicate that it was the result of Facts:
prejudice or corruption on the part of the trial court. Damages are not intended to
enrich the complainant at the expense of the defendant. They are awarded only to
alleviate the moral suffering that the injured partly had undergone by reason of 1. Rufina Diasanta boarded at Atimonan, Quezon, Bus No. 29 of petitioner Laguna-
the defendant's culpable action.   There is not hard-and-fast rule in the Tayabas Transportation Co., which was bound for Manila;
determination of what would be a fair amount of moral damages since each case 2. The bus driver, Henry Betito, drove and operated it so recklessly that, upon nearing
must be governed by its own peculiar facts. the town of Pagbilao, the bus went off the asphalted part of the road on to the
In the instant case, the injury suffered by petitioner is not so serious or extensive as to shoulder thereof;
warrant an award amounting to P900,000.00. The assessment of P200,000.00 as 3. Because of the holes and ruts on that portion of the road and of the excessive speed
moral damages and P50,000.00 as exemplary damages in his favor is, in our view, of the bus, the same jumped up and down so violently that respondent was
reasonable and realistic. jerked from her seat to the floor with such force that she suffered a fracture in
ACTUAL DAMAGES: we agree with the Court of Appeals that the amount of P20,000.00 her vertebrae;
granted by the trial court to petitioner should not be disturbed. In the absence of any 4. She was placed in a cast, thereby immobilizing her for several months;
countervailing evidence from private respondent, and in view of the negligence 5. CFI of Manila rendered a decision, sentencing the petitioner to pay to respondent:
attributable to it, the foregoing testimony suffices as basis for actual damages as a. (1) P1,281.05 as reimbursement for actual expenses;
determined by the court a quo. b. (2) P3,000 as consequential damages;
- Spent for food for the five days. They would spend thirty dollars each for c. (3) P3,000 for moral and exemplary damages;
meals. The equivalent in pesos is twenty thousand pesos. d. (4) P2,000 for attorney's fee; and
ATTORNEY’S FEE: they may be awarded when the defendant's act or omission has e. (5) the costs;
compelled the plaintiff to litigate with third persons or to incur expenses to protect his 6. On appeal, this decision was affirmed by the Court of Appeals, except as to
interest. Awarded the amount of P25,000.00, instead of P100,000.00 earlier awarded, "the award of P3,000 for moral and exemplary damages", which was "reduced
may be considered rational, fair and reasonable. to P1,000 only for exemplary damages".
7. Petitioner (Bus Company) maintains that these awards for actual and consequential
damages, exemplary damages and attorney's fees contravene Articles 2199, 2201,
2208 and 2232 of the Civil Code of the Philippines and our decision in Bautista vs.
Lovina, and Pascual vs. Court of Appeals, as well as that of the Court of Appeals in
complete the verification process and to sent their reply to Los Angeles. The inevitable conclusion
Alegre vs. Batangas Transportation Co., CA-G. R. No. 24823-R (December 29, 1961).
is that CATHAY's Hongkong personnel never acted promptly and timely on the request for
verification.
[NG: I suppose these cases did not award exemplary damages]

Besides, to be stranded for five (5) days in a foreign land because of an air carrier's negligence is Issue: Exemplary damages warranted? Yes.
too exasperating an experience for a plane passenger. For sure, petitioner underwent profound
distress and anxiety, not to mention the worries brought by the thought that he did not have Held: WHEREFORE, the decision appealed from is hereby affirmed, with costs against
enough money to sustain himself, and the embarrassment of having been forced to seek the the petitioner. It is so ordered.
generosity of relatives and friends.

Upon consideration of the evidence on record, the Court of Appeals affirmed the finding
of the trial court to the effect that respondent had suffered actual damages and
consequential damages in the sums of P1,281.05 and P3,000, respectively. These are
findings of fact which we cannot review on appeal by certiorari.
As regards the exemplary damages, Article 2232 of the Civil Code of the Philippines
provides that, in contracts and quasi-contracts the court may award exemplary damages
if the defendant acted in a "wanton, fraudulent, reckless, oppressive or malevolent
manner." In the case at bar, petitioner's driver and, hence, its agent has been
found guilty of recklessness. No such finding had been made in the Bautista case.
Moreover, under Article 2208 of the same Code, attorney's fees other than judicial costs
may be awarded "when exemplary damages are awarded."
Upon the other hand, the Alegre case relied upon by petitioner is not in point, not only
because the bus driver in that case — unlike the one involved in the one at bar — had
not acted recklessly, but, also, because the injured party in the Alegre case may have
contributed, although in a small measure, to the occurrence of the accident that resulted
in the injury upon which the action was based, and no such factor is present in the
present case.
It may not be amiss to note, also, that courts have discretion to grant or not to grant
exemplary damages and that the circumstances obtaining in this case do not warrant
interference with the exercise of such discretion by the lower courts.
15 MUNSAYAC V. DE LARA, 23 SCRA 1086 –KING
LOURDES MUNSAYAC, petitioner, vs. BENEDICTA DE LARA and THE COURT OF
APPEALS, respondents. G.R. No. L-21151. June 26, 1968.
Munsayac v de Lara – King
ER: Munsayac argues the exemplary damages. It was found that his driver drove
negligently causing injuries to De Lara, a passenger of his jeep. Exemplary damages were
awarded because after the injury happened, Munsayac failed or even refused to placate
the sufferings of de Lara.
Issue: Whether or not exemplary damages should be awarded? No
HELD:
A principal or master can be held liable for exemplary or punitive damages based upon
the wrongful act of his agent or servant only where he participated in the doing of such
wrongful act or has previously authorized or subsequently ratified it with full
knowledge of the facts.
07 Transpo Compiled Digests. Week 8. Atty. Ampil 3C 26
2015.
Reasons given for this rule are that since damages are penal in character, the motive
authorizing their infliction will not be imputed by presumption to the principal when
the act is committed by an agent or servant, and that since they are awarded not by way
of compensation, but as a warning to others, they can only be awarded against one who
has participated in the offense, and the principal therefore cannot be held liable for them
merely by reason of wanton, oppressive or malicious intent on the part of the agent.
COMPLETE
Facts:
 As a result of injuries suffered by the Benedicta de Lara while riding as a passenger
on a jeepney owned and operated by Lourdes Munsayac this action for recovery of
damages was filed in the Court of First Instance of Rizal (Pasig Branch).
 The trial Judge found the driver of Munsayac recklessly negligent: he drove at
an excessive speed, unmindful of the fact that the road was under repair and
heedless of the passengers' pleas that he go more slowly.
 Munsayac’s admission that the accident happened and the de Lara's extensive
injuries as a result thereof, despite which the Munsayac failed, or even refused,
to placate the sufferings of de Lara, necessitating the filing of this action, entitled
de Lara to exemplary damages — to set an example to others — and attorney's
fees.
 CFI RULING: Besides the award of compensatory damages for actual expenses
incurred and loss of income, the defendant was ordered to pay P1,000.00 as
exemplary damages and P500.00 as attorney's fees.
 As to the exemplary damages and the attorney’s fees, the Munsayac appealed.
 Appellate Court affirmed CFI.
Issue: Whether or not exemplary damages should be awarded? – NO
HELD: IN VIEW OF THE FOREGOING, the judgment appealed from is modified by
eliminating the award for exemplary damages, and affirmed with respect to the
attorney's fees. No pronouncement as to costs.
RATIO:
 The Civil Code provides that "exemplary or corrective damages are imposed, by
way of example or correction for the public good" (Act 2229); and that in contracts
"the Court may award exemplary damages if the defendant acted in wanton,
fraudulent, reckless, oppressive or malevolent manner" (Art. 2232).
 Munsayac points out that the act referred to in Article 2232 must be one
which is coetaneous (at the same time) with and characterizes the breach of
the contract on which the suit is based, and not one which is subsequent to
such breach and therefore has no causal relation thereto, such as the herein
defendant's failure to placate the sufferings of the plaintiff.

 Munsayac relies on the case of Rotea vs. Halili:
 According to the rule adopted by many courts, a principal or master can be
held liable for exemplary or punitive damages based upon the wrongful act of
his agent or servant only where he participated in the doing of such wrongful
act or has previously authorized or subsequently ratified it with full
knowledge of the facts. Reasons given for this rule are that since damages are
penal in character, the motive authorizing their infliction will not be imputed by
presumption to the principal when the act is committed by an agent or servant, and
that since they are awarded not by way of compensation, but as a warning to
others, they can only be awarded against one who has participated in the offense,
and the principal therefore cannot be held liable for them merely by reason of
wanton, oppressive or malicious intent on the part of the agent.
 We believe the point of the appellant is well-taken.
 It is difficult to conceive how Munsayac in a breach of contract case could be held to
have acted in a wanton, fraudulent, reckless, oppressive or violent manner within
the meaning of Article 2232 for something he did or did not do after the breach,
which had no causal connection therewith.
 The law does not contemplate a vicarious liability on his part: the breach is
his as party to the contract, and so if he is to be held liable at all for exemplary
damages by reason of the wrongful act of his agent, it must be shown that he
had previously authorized or knowingly ratified it thereafter, in effect making
him a co-participant.
 There is nothing to show previous authority or subsequent ratification by
appellant insofar as the recklessness of the driver was concerned. The mere
statement that Munsayac failed, even refused, to placate the suffering of the
plaintiff, necessitating the filing of the action, is too tenuous a basis to warrant the
conclusion that Munsayac approved of the wrongful act of his servant with full
knowledge of the facts.
 It is not enough to say that an example should be made, or corrective measures
employed, for the public good, especially in accident cases where public carriers are
involved. For the causative negligence in such cases is personal to the employees
actually in charge of the vehicles, and it is they who should be made to pay this kind
of damages by way of example or correction, unless by the demonstrated tolerance
or approval of the owners they themselves can be held at fault and their fault is of
the character described in Article 2232 of the Civil Code.
o Otherwise there would be practically no difference between their liability
for exemplary damages and their liability for compensatory damages,
which needs no proof of their negligence since the suit is predicated on
breach of contract and due diligence on their part does not constitute a
defense.
16 SARKIES TOURS V. IAC, 124 SCRA 588 –LAGOS
Common Carrier MENDOZA
07 Transpo Compiled Digests. Week 8. Atty. Ampil 3C 27
2015.
Travel Agent SARKIES
Passenger Dizon Family
Problem Boat coming from Corregidor, on its way back to Manila, capsized.
The youngest daughter of Spouses Dizon perished. Appellate court
awarded moral & exemplary damages.
Who Won Passenger, but exemplary damages was eliminated for there was no
showing that SARKIES acted in a wanton and malevolent manner.
Moral damages reduced.
Doctrine: Exemplary damages, award of, not proper, absent a showing that the
company acted in a wanton or malevolent manner for the death of some passengers
aboard ferry boat.
ER: (I think this should be enough  )
 SARKIES advertised its tour package to Corregidor in the newspapers. P10.00 for
the boat fare, shrine fee, and a tour of the island.
 The Spouses Dizon and their 4 children availed of the tour package and bough 6
tickets.
 They boarded the M/V Edisco, owned by MENDOZA on their way to Corregidor
Island. On that day, the waters of Manila Bay were choppy.
o The M/V Edisco, is an oversized motorized banca with outriggers, a steel
hull, a canvas awning and rattan chairs on the deck. It was not registered
to ferry passengers, nor was it licensed to operate as a watercraft. On
that trip, it had 146 passengers on board and was overloaded and lacked
adequate lifesaving equipment.
 On their return trip, the waters were also choppy and there were intermittent
rains. Around 2 PM, the boat capsized. Spouses Dizon and their two children,
Bernardita and Emerito, managed to clamber up the hull of the boat and were
rescued by a passing yacht. Another daughter, Cecilia, was picked up by one of the
other watercrafts that came to the rescue. However, Merceditas, their 6 yr old
child was never found. A few days later, they were summoned to identify the
body of Merceditas.
 DIZONS filed a complaint against SARKIES and MENDOZA.
 TC: exonerated SARKIES
 CA: reversed, SARKIES and MENDOZA are jointly and severally liable
o And that both shall pay the following:
o (a) P12,000.00 in actual damages for the death of Merceditas Dizon;
o (b) P1,650.00 for loss of cash and personal belongings;
o (c) P3,000.00 for funeral expenses;
o (d) P100,000.00 for moral damages;
o (e) P50,000.00 as exemplary damages;
o (f) P5,000.00 as attorney’s fees; and
o (g) the costs of suit.”

(Note: The SC agreed that SARKIES and MENDOZA should be jointly and severally
liable.)
Issue: WON the award of exemplary and moral damages were proper?
Ratio:
(Guys, this is really the only thing the court said with regard to damages)
 As to the exemplary damages, it was eliminated for there was no showing that
SARKIES acted in a wanton and malevolent manner.
o It is not enough to say that an example should be made, or corrective
measures be employed, for the public good especially in accident cases
where public carriers are involved.
o The causative negligence in such cases is personal to the employees
actually in charge of the vehicles, and it is they who should be made
to pay this kind of damages by way of example or correction, unless
by the demonstrative tolerance or approval of the owners they
themselves can be held at fault
 For moral damages, the court found the sum P100,000.00 excessive and in the
exercise of their discretion, hereby reduced it to P30,000.00.
 Also, there is the right of reimbursement of SARKIES held liable for damages
against MENDOZA for actual negligence for drowning of passengers.
COMPLETE
Facts:
 A few weeks before June 12, 1971, Sarkies Tours Phils., Inc. (SARKIES) advertised in
the newspapers its tour to Corregidor on Independence Day, for a fee of “P10.00 per
person including:
o a) boat fare—Manila-Corregidor-Manila
o b) shrine fee and
o c) tour of Corregidor Island by bus
 Spouses Dizon (private respondents) purchased six round-trip tickets from
SARKIES.
o They were issued an official receipt under the SARKIES letterhead. Also
issued by SARKIES for each set of tickets were one (1) blue ticket and one
(1) white ticket, with the name “SARKIES” appearing on both the blue and
white tickets, while the word “Edisco” was handwritten across the white
ticket
 The following day, the Spouses Dizon together with their 4 children, Cecilia,
Bernardita, Merceditas and Emerito, were transported on a SARKIES bus from the
SARKIES main office at Filipinas Hotel, Roxas Boulevard to Muelle del Banco
National, alongside the Pasig River, where they boarded the M/V Edisco.
 Upon departure from Manila, Manila Bay was then rather choppy. The white tickets
were collected on board by Julian V. MENDOZA, while the blue tickets were
collected upon boarding the SARKIES bus at Corregidor Island.
07 Transpo Compiled Digests. Week 8. Atty. Ampil 3C 28
2015.
 The M/V Edisco, owned and operated by MENDOZA, is an oversized motorized
banca with outriggers, a steel hull, a canvas awning and rattan chairs on the deck. It
was not registered to ferry passengers, nor was it licensed to operate as a
watercraft. On that trip, it had 146 passengers on board and was overloaded and
lacked adequate lifesaving equipment.
 On the return trip to Manila, the weather was practically the same as when they left
but with intermittent rains.
o Around 2:00 P.M., disaster struck after about thirty minutes of cruising.
The boat leaned towards starboard and the chairs slid into the water in
that direction. In a matter of seconds, the boat capsized. Spouses Dizon
and their two children, Bernardita and Emerito, managed to clamber up
the hull of the boat and were rescued by a passing yacht. Another
daughter, Cecilia, was picked up by one of the other watercrafts that came
to succor.
o Spouses Dizon lost cash and personal belongings. Merceditas, their six-
year-old daughter was missing and could not be located even after they
reached Manila around 7:00 P.M. of that day. After six days of fruitless and
heart-rending inquiries, Spouses Dizon were summoned to Funeraria
Quiogue were they identified a lifeless body as that of their daughter,
Merceditas. There were other fatalities.
 For damages based on the drowning of MERCEDITAS, the DIZONS filed a complaint
against SARKIES and MENDOZA before the then Court of First Instance of Manila.
 Answering, SARKIES alleged that it was not the owner nor charterer of M/V Edisco;
that it is only a booking agent and not a carrier; and that it had acted with due
diligence and care in relying on MENDOZA’s representations that his vessel was
duly authorized to operate and was sea-worthy.
 MENDOZA denied liability claiming that he was not the together with his son who
also perished in the tragedy; that the contract of carriage was between SARKIES
and Spouses Dizon, and that the marine accident was due to force majeure.
MENDOZA was declared in default for failure to appear during the pre-trial.
 Trial Court: exonerated SARKIES
o it was “neither an agent nor the operator of M/V Edisco”;
o that it had merely booked DIZONS with M/V Edisco, one of the three
private carriers, in addition to a Philippine Navy boat, plying the route
from Manila to Corregidor,
o and attributed sole responsibility to MENDOZA, whom it found to be the
owner-operator of M/V Edisco, for negligence consisting of “unscrupulous
conversion of a fishing boat into a ferry boat without first securing a
license to operate as such
 CA: SARKIES and MEDOZA jointly and severally liable
o relationship between SARKIES and the excursionists was “a single
operation . . . which in effect guaranteed them safe passage all throughout
o both shall pay the following:
o (a) P12,000.00 in actual damages for the death of Merceditas Dizon;
o (b) P1,650.00 for loss of cash and personal belongings;
o (c) P3,000.00 for funeral expenses;

o (d) P100,000.00 for moral damages;
o (e) P50,000.00 as exemplary damages;
o (f) P5,000.00 as attorney’s fees; and
o (g) the costs of suit.”
ISSUE:
(The SC agreed with making SARKIES and MENDOZA jointly and severally liable but
revised the award for moral and exemplary damages)
WON the award for moral and exemplary damages were proper?
HELD:
CA judgment is modified
1. eliminating exemplary damages
2. reducing moral damages from P100,000 to P30,000.00
3. ordering Julian V. Mendoza to pay and/or reimburse SARKIES any and all
expenses and damages to be paid by to DIZONS
4. The other parts of the judgment are confirmed.
RATIO:
For EXEMPLARY DAMAGES
 the award should be eliminated
 It is not enough to say that an example should be made, or corrective measures
be employed, for the public good especially in accident cases where public
carriers are involved. The causative negligence in such cases is personal to the
employees actually in charge of the vehicles, and it is they who should be made
to pay this kind of damages by way of example or correction, unless by the
demonstrative tolerance or approval of the owners they themselves can be
held at fault and their fault is of the character described in article 2232 of the
Civil Code
 there is no showing that SARKIES acted “in a wanton . . . . or malevolent
manner”
For MORAL DAMAGES
 while we find them justly due, under the factual milieu, however, we consider
the sum P100,000.00 excessive and in the exercise of our discretion, hereby
reduce them to P30,000.00.
In its Answer to the Complaint of the DIZONS, SARKIES included a cross-claim against
MENDOZA as the owner/operator of the EDISCO. Considering that actual negligence for
the drowning of MERCEDITAS was the responsibility of MENDOZA, it is but fair that
SARKIES should have a right of action against MENDOZA for reimbursement. Although
Article 2181 of the Civil Code is not technically invocable, its principle should be applied
in favor of SARKIES
“Where a railroad company had been compelled to pay a judgment for damages for
injuries sustained by a passenger as a result of the maltreatment and misconduct of the
07 Transpo Compiled Digests. Week 8. Atty. Ampil 3C 29
2015.
conductor . . . the Court (held) that the servant was liable to his master for all loss and
damage sustained by it.”
17 R TRANSPORT CORP. V. EDUARDO PANTE, 599 SCRA 747 –LOPA
R TRANSPORT CORPORATION v. EDUARDO PANTE , G.R. 162104, September 15,
2009
Common Carrier R Transport bus. Driven by Merdiquia.
Passenger Eduardo Pante
Problem driving fast and recklessly, and bumped into a tree and a house.
Pante suffered injuries
Who Won Passenger Eduardo Pante. Awarded actual, moral, exemplary damages
and attorney’s fees
Emergency Recitation:
 Pante was a passenger on an R Transport bus from Cubao to Nueva Ecija. The
driver was driving fast and recklessly, and bumped into a tree and a house.
Pante suffered injuries and had to undergo two surgeries.
 R Transport tried to interpose the defense of a good father of a family in the
selection and supervision of its employees as well as force majeure.
 RTC and CA ruled in favor of Pante. Awarded actual, moral, exemplary damages and
attorney’s fees.
ISSUE: WON R Transport is liable. HELL YES! All damages were confirmed!
RATIO:
 Article 1759 - “[c]ommon carriers are liable for the death or injury to passengers
through the negligence or willful acts of the former's employees, although such
employees may have acted beyond the scope of their authority or in violation of the
orders of the common carriers. This liability of the common carriers does not
cease upon proof that they exercised all the diligence of a good father of a
family in the selection and supervision of their employees.”
 In this case, the testimonial evidence of respondent showed that petitioner, through
its bus driver, failed to observe extraordinary diligence, and was, therefore,
negligent in transporting the passengers of the bus safely
 Re: Actual Damages: The statement of account is admissible evidence of
hospital expenses incurred by respondent. It need not be the official receipt
 RE: Moral Damages: A person is entitled to the integrity of his body and if that
integrity is violated, damages are due and assessable.  Thus, the usual practice is
to award moral damages for physical injuries sustained.  
 Re: Exemplary Damages: respondent’s testimonial evidence showed  that the bus
driver, Johnny Merdiquia,  was driving the bus very fast in a reckless, negligent
and imprudent manner; hence, the bus hit a tree and a house along the highway
in Baliuag, Bulacan.  The award of exemplary damages is, therefore, proper.

 Re: Attorney’s Fees: The award of legal fees is commensurate to the effort of
respondent’s counsel, who attended to the case in the trial court for seven years,
and who finally helped secure redress for the injury sustained by respondent after
14 years.     in CA-G.R. CV No. 76170, dated October 7, 2003, and its Resolution dated February
 
PERALTA, J.:
 R Transport Corp (R TRANSPORT) is a common carrier engaged in operating a bus
line transporting passengers from Cubao to Nueva Ecija. Rizalina Lamzon
(LAMZON) is the president of R Transport.
 Pante was a passenger on one of R Transport’s buses on January 27, 1995. (CVW-
635 Body No. 94810). He paid P48.00 for his fare and was issued a ticket
(#555401). The driver of the bus was Johnny Merdiquia (Merdiquia)
 Merdiquia was driving fast and recklessly when the bus hit a tree and a house
along Dona Remedios Trinidad Highway in Baliuag Bulacan.
o Pante sustained physical injuries and was brought to the hospital.
o He was diagnosed to have sustained a “laceration frontal area,
with fracture of the right humerus,” or the bone that extends
from the shoulder to the elbow of the right arm.   
o He underwent surgery for the same.
 The hospital’s statement of account shows that the hospital bill was P22,870
and that Pante spent P8,072.60 for medicines. R Transport gave Pante’s wife
P7,000 for the stainless steel instrument used in her husband’s arm.
 Pante was informed that he needed another operation after 2 years of rest. Pante
was unemployed for almost a year because Goldilocks (employer) refused to accept
him with his disability as he could not perform his usual job. He had the second
operation 4 years later and spent P15,170 on the same.
 Pante demanded reimbursement from R Transport but the same was refused.
 Pante filed a case for damages in RTC Gapan City.
 Defenses of R Transport: diligence of a good father of a family in the selection and
supervision of its employees, force majeure
 Case in the RTC: R Transport president and counsel were always absent and kept
asking for motions to postpone the trials. R transport was declared to have waived
his right to present evidence in view of the unexplained absences despite prior
notice.
 RTC RULING: in favor of Pante, awarding the following:
o 1.)    P39,112.60 as actual damages;
o 2.)    P50,000.00 as moral damages;
o 3.)    P50,000.00 as exemplary damages;
o 4.)    Twenty-five percent (25%) of the total of which shall constitute
a lien as contingent fee of plaintiff’s counsel.
 CA affirmed the decision of the RTC. Defense of R Transport do not apply to cases
involving contracts of carriage.  
ISSUES:
07 Transpo Compiled Digests. Week 8. Atty. Ampil 3C 30
2015.
1. W/N R Transport is liable to Pante for damages? YES!
HELD: WHEREFORE, the petition is DENIED.  The Decision of the Court of Appeals
5, 2004, are hereby AFFIRMED.    Petitioner  R Transport Corporation is  ordered
to  pay respondent Eduardo Pante P39,112.60 as actual damages; P50,000.00 as
moral damages; and P50,000.00 as exemplary damages. Twenty-five percent
(25%) of the total amount shall constitute a lien as contingent fee of respondent’s
counsel.
 SC talked about the extraordinary diligence required of common carriers, their
obligation to transport passengers safely to their destination and the presumption
of fault in case of death or injury of passengers
 Article 1759 - “[c]ommon carriers are liable for the death or injury to passengers
through the negligence or willful acts of the former's employees, although such
employees may have acted beyond the scope of their authority or in violation of the
orders of the common carriers. This liability of the common carriers does not cease
upon proof that they exercised all the diligence of a good father of a family in the
selection and supervision of their employees.”
In this case, the testimonial evidence of respondent showed that petitioner, through
its bus driver, failed to observe extraordinary diligence, and was, therefore,
negligent in transporting the passengers of the bus safely
 even if petitioner was able to prove that it exercised the diligence of a good father of
the family in the selection and supervision of its bus driver, it is still liable to
respondent for the physical injuries he sustained due to the vehicular accident
 R Transport cannot complain that it was denied due process when the trial court
waived its right to present  evidence,  because it only had itself to blame for its
failure to attend the hearing scheduled for reception of its evidence.  A party is not
denied due process when the records of the case showed that he was amply given
the opportunity to present his evidence, which he, however, waived. 
 Re: Actual Damages:
 The statement of account is admissible evidence of hospital expenses
incurred by respondent. It need not be the official receipt
 RE: Moral Damages: 
 Spouses Ong v. Court of Appeals - awarded moral damages to paying
passengers, who suffered physical injuries  on board a bus that figured in
an accident.  A person is entitled to the integrity of his body and if that
integrity is violated, damages are due and assessable.  Thus, the usual
practice is to award moral damages for physical injuries sustained.  
 In Spouses Ong, the Court awarded moral damages in the amount
of P50,000.00  to a passenger who was deemed to have suffered mental
anguish and anxiety because  her right arm could not function in a normal
manner.  Another passenger, who suffered injuries on his left chest, right
knee, right arm and left eye, was awarded moral damages in the amount
of P30,000.00 for the mental anxiety and anguish he suffered from the
accident.

 Hence, the award of moral damages in the amount of P50,000.00 is
proper.
 Re: Exemplary Damages
 in contracts and  quasi-contracts, the court may award exemplary
damages if the defendant acted in a wanton, fraudulent, reckless,
oppressive or malevolent manner  ISSUE: W/N Court may grant moral damages to a deceased’s brothers and sisters
  In this case, respondent’s testimonial evidence showed  that the bus
driver, Johnny Merdiquia,  was driving the bus very fast in a reckless,
negligent and imprudent manner; hence, the bus hit a tree and a house
along the highway in Baliuag, Bulacan.  The award of exemplary
damages is, therefore, proper.
 Re: Attorney’s Fees
 Pante filed his Complaint for damages as pauper-litigant.
 The award of legal fees by the trial court to respondent’s counsel was a
contingent fee of 25 % of the total amount of damages, which shall
constitute a lien on the total amount awarded. Total = P34,778.15
 The award of legal fees is commensurate to the effort of respondent’s
counsel, who attended to the case in the trial court for seven years, and
who finally helped secure redress for the injury sustained by respondent
after 14 years.   
18 SULPICIO LINES V. DOMINGO E. CURSO, 615 SCRA 575 –
LUCENARIO
Sulpicio Lines Inc. v. Curso (2010)
Common Carrier Sulpicio Lines
Passenger Dr. Domingo Curso
Problem Ship sank due to the bad weather brought about by Typhoon
Unsang. CA granted moral damages to SIBLINGS.
Who Won Sulpicio, Siblings of the deceased are not included in Art 2206 as
being entitled to moral damages.
Emergency Recitation:
 1988 - Dr. CURSO boarded Sulpicio Lines ship M/V Doña Marilyn in Manila bound
for Tacloban. One day into the voyage, the ship sank due to the bad weather
brought about by Typhoon Unsang. Unsang and hundreds of others died. Their
bodies were never recovered.
 When CURSO died, he was 48 years old, worked as resident physician at Naval
District Hospital, Biliran earning monthly salary of Php3,940, would have worked
until 65, and had no more parents, wife, or kids.
07 Transpo Compiled Digests. Week 8. Atty. Ampil 3C 31
2015.
 1993 – CURSO’s only remaining heirs (his brothers and sisters, SIBLINGS) sued
SULPICIO in RTC Biliran for damages due to breach of contract. RTC dismissed
based on defense of force majeure.
 CA reversed and granted moral damages to SIBLINGS.
 NO
 In fine, moral damages may be recovered in an action upon breach of contract of
carriage only when:
o (a) where death of a passenger results, or
o (b) it is proved that the carrier was guilty of fraud and bad faith, even if
death does not result.
 Article 2206 of the Civil Code entitles the descendants, ascendants, illegitimate
children, and surviving spouse of the deceased passenger to demand moral
damages for mental anguish by reason of the death of the deceased. Siblings of the
deceased are not included in this enumeration. Inclusio unius est exclusio alterius.
COMPLETE
FACTS:
 Oct. 23, 1988 – Dr. Curso boarded Sulpicio Lines ship/inter-island vessel M/V Doña
Marilyn in Manila bound for Tacloban City
 Oct. 24, 1988 afternoon – M/B Marilyn sank due to inclement weather caused by
Typhoon Unsang. CURSO died and his body was never recovered (along with
hundreds of other passengers who died)
 Details of CURSO at time of death –
o 48 years old
o Employed as resident physician at the Naval District Hospital in Naval,
Biliran
o Basic monthly salary of P3,940, and would have retired from government
service by December 20, 2004 at the age of 65
o Parents predeceased him, and had no spouse or children.
 January 21, 1993 – surviving brothers and sisters of CURSO (SIBLINGS) sued
SULPICIO in RTC Biliran for damages based on breach of contract of carriage, that
SULPICIO was negligent.
o Prayed for: (a) compensatory damages of P1,924,809.00; (b) moral
damages ofP100,000.00; (c) exemplary or corrective damages in the
amount deemed proper and just; (d) expenses of litigation of at
least P50,000.00; (e) attorney’s fees of P50,000.00; and (f) costs of suit.
 SULPICIO defense – force majeure
 RTC dismissed the complaint. Ruled in favour of SULPICIO on the ground of force
majeure.
 CA reversed RTC decision, and granted: Death indemnity Php50,000, Loss of
earning capacity Php504,241.20, Moral damages Php100,000, and costs of suit

o Factual bases of finding of SULPICIO’s negligence:
o Inadequate explanation why the officers of the M.V. Doña Marilyn
had not apprised themselves of the weather reports on the approach
of typhoon "Unsang" which had the power of a signal no. 3 cyclone
o No account of the acts and decision of the crew of the ill-fated ship from
8:00 PM on October 23, 1988 when the Chief Mate left his post until 4:00
AM the next day when he resumed duty. – CA said that it should have
received weather updates during this period and, if appropriately acted
upon, would have made the captain change the ship’s course to avoid the
storm
o Ship was not fit for voyage - since at the first sign of bad weather, the
ship’s hydraulic system failed and had to be repaired mid-voyage, making
the vessel a virtual derelict amidst a raging storm at sea.
 Justification for CA grant of moral damages:
o SIBLINGS took great pains to recover, in vain, the body of their brother, at
their own cost, while suffering great grief due to the loss of a loved one
o SIBLINGS were unable to recover the body of their brother
ISSUE: W/N the Court can grant moral damages to the brothers and sisters of
deceased.  NO
HELD: WHEREFORE, the petition for review on certiorari is granted, and the award
made to the respondents in the decision dated September 16, 2002 of the Court of
Appeals of moral damages amounting to P100,000.00 is deleted and set aside.
RATIO:
As a general rule, moral damages are not recoverable in actions for damages predicated
on a breach of contract, unless there is fraud or bad faith. 8 As an exception, moral
damages may be awarded in case of breach of contract of carriage that results in the
death of a passenger, 9 in accordance with Article 1764, in relation to Article 2206 (3), of
the Civil Code.
Article 1764. Damages in cases comprised in this Section shall be awarded in
accordance with Title XVIII of this Book, concerning Damages. Article 2206 shall
also apply to the death of a passenger caused by the breach of contract by a
common carrier.
Article 2206. The amount of damages for death caused by a crime or quasi-delict shall be
at least three thousand pesos, even though there may have been mitigating
circumstances. In addition:
(1) The defendant shall be liable for the loss of the earning capacity of the
deceased, and the indemnity shall be paid to the heirs of the latter; such
indemnity shall in every case be assessed and awarded by the court, unless the
deceased on account of permanent physical disability not caused by the
defendant, had no earning capacity at the time of his death;
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2015.
(2) If the deceased was obliged to give support according to the provisions of
article 291, the recipient who is not an heir called to the decedent's inheritance
by the law of testate or intestate succession, may demand support from the
person causing the death, for a period not exceeding five years, the exact
duration to be fixed by the court;
(3) The spouse, legitimate and illegitimate descendants and ascendants
of the deceased may demand moral damages for mental anguish by
reason of the death of the deceased.
The foregoing legal provisions set forth the persons entitled to moral damages. The
omission from Article 2206 (3) of the brothers and sisters of the deceased
passenger reveals the legislative intent to exclude them from the recovery of
moral damages for mental anguish by reason of the death of the deceased.  Inclusio
unius est exclusio alterius.
Essentially, the purpose of moral damages is indemnity or reparation, that is, to enable
the injured party to obtain the means, diversions, or amusements that will serve to
alleviate the moral suffering he has undergone by reason of the tragic event.
According to Villanueva v. Salvador,13 the conditions for awarding moral damages are:
o (a) there must be an injury, whether physical, mental, or
psychological, clearly substantiated by the claimant;
o (b) there must be a culpable act or omission factually established;
o (c) the wrongful act or omission of the defendant must be the
proximate cause of the injury sustained by the claimant; and
o (d) the award of damages is predicated on any of the cases stated in
Article 2219 of the Civil Code.
To be entitled to moral damages, the respondents must have a right based upon law. It
is true that under Article 100314 of the Civil Code they succeeded to the entire
estate of the late Dr. Curso in the absence of the latter’s descendants, ascendants,
illegitimate children, and surviving spouse. However, they were not included
among the persons entitled to recover moral damages, as enumerated in Article
2219 of the Civil Code.
Art. 2219: “xxx The parents of the female seduced, abducted, raped or abused referred
to in No. 3 of this article, may also recover moral damages.
The spouse, descendants, ascendants and brothers and sisters may bring the action
mentioned in No. 9 of this article, in the order named.”
Article 2219 circumscribes the instances in which moral damages may be
awarded. The provision does not include succession in the collateral line as a
source of the right to recover moral damages.
19 PHILIPPINE HAWK V. VIVIAN TAN LEE, 612 SCRA 576 –
MAGTAGNOB

Philippine Hawk v Vivian Lee
Keyword: Motorcycle, Jeep and Bus
Topic: Damages
Common Carrier Philippine Hawk
Passenger Vivian and Silvino Tan (but passengers of Motorcycle)
Problem Philippine hawk hit the motorcycle, which caused the death of
Silvino and injuries to Vivian. Philippine Hawk contends that only
actual and moral damages should have been awarded since it is the
only part that he questioned on appeal. But instead, the CA awarded
other damages like temperate, civil indemnity, death indemnity, etc.
Who Won Vivian Tan (passenger). Other damages awarded was proper.
EMERGENCY DIGEST:
Vivian and Silvino were riding a motorcycle. They just came from Pasumbal Machine
Shop to inquire re the repair of their tanker. They were on the left side of the road. A
passenger jeep was also on the left side of the road. When the motorcycle was on a
stop, preparing to make a turn on the right side of the road, they saw the Bus of
Philippine Hawk, driven by Avila, running fast towards them. The bus hit the jeep
on the left side of the road, and then the motorcycle that was trying to cross to the
right side of the street. Silvino died, and Vivian suffered injuries. Vivian was
hospitalized.
Vivian filed a complaint for quasi-delict against Philippne Hawk, praying for damages.
Philippine Hawk denied liability on the ground that it exercised dye diligence in the
selection of supervision of Avila, the driver.
RTC- Vivian won. Ordered Philippine Hawk and Avila solidarily liable for actual
and moral damages.
Philippine Hawk appealed the award of actual and moral damages.
CA- Affirmed the RTC, with modification in the amount of damages. It added
unearned income, civil indemnity and temperate damages.
ISSUE: W/N The awarded damages was proper (despite the fact that only Philippine
Hawk appealed the actual and moral damages, and Vivian never appealed to the
appellate court)?—YES (but again modified the amount)
Held:
 Philippine Hawk contends that only actual and moral damages should
have been awarded since it is the only part that he questioned on appeal.
But instead, the CA awarded all other damages aside from actual and
moral.
 This has no merit. The appellate court is clothed with ample authority to
review matters, even if they are not assigned as errors in the appeal, if it
finds that their consideration is necessary in arriving at a just decision of
the case.
 Actual Damages: They have to be substantiated. The actual damages awarded
was based on the amount of funeral and medical expenses.
 Moral Damages: Awarded in case of injury caused by a quasi-delict (30k).
 Civil indemnity: 50k is jurisprudential value for the death of husband.
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 Unearned Income: Based on earnings as self-employed. The Caltex business
was properly substantiated, so 1M. Not the copra business (not proven).
 Temperate Damages: 10k, for the injury to their motorcycle.
 **also note the Net Earnings computation:
 Life Expectancy= [2/3 (80-age at the Time of Death)]
 Net Earning = Life Expectancy     x  [Gross Annual Income – Reasonable and
Necessary Expenses]  
COMPLETE DIGEST  
The accident involved a motorcycle, a passenger jeep, and a bus with Body No. 119. The
bus was owned by Philippine Hawk, and was then being driven by Margarito Avila.
 
Stipulation of Facts during Pre-Trial:
1. Vivian Lee Tan and her husband Silvino Tan, while on board a
motorcycle with Plate No. DA-5480 driven by the latter, and a Metro Bus with
Plate No. NXR-262 driven by Margarito Avila, were involved in an accident;
2. Silvino Tan died on the spot while Vivian Lee Tan suffered
physical injuries which necessitated medical attention and hospitalization;
3. The deceased Silvino Tan is survived by his wife, Vivian Lee Tan and
four children, three of whom are now residents of the United States; and
4. Defendant Margarito Avila is an employee of defendant Philippine
Hawk. 
Vivian testified that she was riding on their motorcycle in tandem with her husband,
who was on the wheel, at a place after a Caltex gasoline station  in Quezon. They came
from the Pasumbal Machine Shop, where they inquired about the repair of their tanker.
They were on a stop position at the side of the highway; and when they were
about to make a turn, she saw a bus running at fast speed coming  toward them,
and then the bus hit a jeep parked on the roadside, and their motorcycle as well.
She lost consciousness  and was brought to the hospital where she was confined for a
week.  She was later transferred to St. Luke’s Hospital in Quezon City, Manila.  She
suffered a fracture on her left chest, her left arm became swollen, she felt pain in
her bones, and had high blood pressure.
Vivian’s husband died due to the vehicular accident.  The immediate cause of his
death was massive cerebral hemorrhage. Vivian further testified that her husband was
leasing and operating  a Caltex  gasoline station  in Quezon  that yielded one million
pesos a year in revenue. They also had a copra business, which gave them an income of
P3,000.00 a month or P36,000.00 a year.
 
RTC- Philippine Hawk and Avila are liable, solidarily, for the sum of P745,575.00
representing loss of earnings and actual damages plus P50,000.00 as moral damages. 
Philippine Hawk appealed the award of moral and actual damages.
CA- affirmed RTC, but modified the award to the ff: (a) P168,019.55 as actual damages;
(b) P10,000.00 as temperate damages; (c) P100,000.00 as moral damages; (d)
P590,000.00 as unearned income; and (e) P50,000.00 as civil indemnity.

  
ISSUE:
Whether the damages awarded are proper (despite the fact that only Philippine Hawk
appealed the actual and moral damages, and Vivian never appealed to the appellate
court)?—YES (but again modified the amount)
HELD:
WHEREFORE, the petition is DENIED.   The Decision of the Court of Appeals dated
August 17, 2004 in CA-G.R. CV No. 70860 is hereby AFFIRMED with MODIFICATION.  SEC. 8.  Questions that may be decided.  --  No error which does not affect the jurisdiction
Philippine Hawk Philippine Hawk Corporation and Margarito Avila are hereby ordered
to pay jointly and severally Vivian Vivian Lee Tan:
o civil indemnity in the amount of  Fifty Thousand Pesos (P50,000.00);
o actual damages in the amount of  One Hundred Twenty-Seven
Thousand One Hundred Ninety-Two Pesos and  Eighty-Five Centavos
( P127,192.85);
o moral damages in the amount of  Eighty Thousand Pesos
(P80,000.00);
o indemnity for loss of earning capacity in the amount of One  Million
Pesos (P1,000,000.00); and
o temperate damages in the amount of Ten Thousand Pesos
(P10,000.00).  In this case for damages based on quasi-delict, the trial court awarded Vivian the sum of
RATIO:
The Court  agrees with the bus driver Margarito that the motorcycle was moving ahead
of the bus towards  the right side from the  left side of the road, but disagrees with him  the Court of Appeals, Philippine Hawk assigned as error the award of damages by the
that it  crossed the path of the bus while the bus was running on the right side of the
highway.  admissions made by Vivian during the trial.
If the bus were on the right side of the highway and Margarito turned his bus to
the right in an attempt to avoid hitting it, then the bus would not have hit the
passenger jeep vehicle which was then parked on the left side of the road . The fact
that the bus hit the jeep too, shows that the bus must have been running to the left lane
of the highway from right to the left, that the collision between it and the parked jeep
and the moving rightways cycle became inevitable. Besides, Margarito said he saw the
motorcycle before the collision ahead of the bus; that being so, an extra-cautious
public utility driver should have stepped on his brakes and slowed down.  Here,
the bus never slowed down, it simply maintained its highway speed and veered to
the left.  This is negligence indeed.
  
Whenever an employee’s negligence causes damage or injury to another, there instantly
arises a presumption that the employer failed to exercise the due diligence of a good
father of the family in the selection or supervision of its employees. To avoid liability for
a quasi-delict committed by his employee, an employer must overcome the presumption
by presenting convincing proof that he exercised the care and diligence of a good father
of a family in the selection and supervision of his employee.
 
DAMAGES
As regards the issue on the damages awarded, Philippine Hawk contends that it was the
07 Transpo Compiled Digests. Week 8. Atty. Ampil 3C 34
2015.
only one that appealed the decision of the trial court with respect to the award of actual
and moral damages; hence, the Court of Appeals erred in awarding other kinds of
damages in favor of Vivian, who did not appeal from the trial court’s decision.
 
Philippine Hawk’s contention is unmeritorious.
Section 8, Rule 51 of the 1997 Rules of Civil Procedure provides:
 
over the subject matter or the validity of the judgment appealed from or the proceedings
therein will be considered unless stated in the assignment of errors, or closely related to
or dependent on an assigned error and properly argued in the brief, save as the court
pass upon plain errors and clerical errors.
“…The procedure in the Supreme Court being generally the same as that in the
Court of Appeals, unless otherwise indicated (see Secs. 2 and 4, Rule 56), it has
been held that the latter is clothed with ample authority to review matters, even if
they are not assigned as errors on appeal, if it finds that their consideration is
necessary in arriving at a just decision of the case.”
P745,575.00, representing loss of earning capacity (P590,000.00) and actual damages
(P155,575.00 for funeral expenses), plus P50,000.00 as moral damages.  On appeal to
trial court on the ground that it was based merely on suppositions and surmises, not the
 
LOSS OF EARNING CAPACITY
The indemnity for loss of earning capacity of the deceased is provided for by Article
2206 of the Civil Code. Compensation of this nature is awarded not for loss of earnings,
but for loss of capacity to earn money.
 
As a rule, documentary evidence should be presented to substantiate the claim for
damages for loss of earning capacity. By way of exception, damages for loss of
earning capacity may be awarded despite the absence of documentary evidence
when: (1) the deceased is self-employed and earning less than the minimum wage
under current labor laws, in which case, judicial notice may be taken of the fact that in
the deceased's line of work no documentary evidence is available; or (2) the deceased
is employed as a daily wage worker earning less than the minimum wage under
current labor laws.
 
In this case, the records show that Vivian’s  husband was  leasing and operating  a
Caltex gasoline station in Gumaca, Quezon.   Vivian testified that her husband earned
an annual income of one million pesos. Vivian presented in evidence a Certificate of
Creditable Income Tax Withheld at Source for the Year 1990, which showed that
Vivian’s husband earned a gross income of P950,988.43 in 1990. It is reasonable to use
the Certificate and Vivian’s testimony as bases for fixing the gross annual income of the

deceased at one million pesos before Vivian’s husband died on March 17, 1999.
However, no documentary evidence was presented regarding the income derived from
their copra business; hence, the testimony of Vivian as regards such income cannot be
considered.   injuries she sustained due to the vehicular accident. Under Art. 2219 of the Civil
 
In the computation  of  loss of earning capacity, only net earnings, not gross
earnings, are to be considered; that is, the total of the earnings less expenses
necessary for the creation of such earnings or income, less living and other incidental
expenses. In the absence of documentary evidence, it is reasonable to peg necessary
expenses for the lease and operation of the gasoline station at 80 percent of the gross
income, and peg living expenses at 50 percent of the net income (gross income less
necessary expenses).    award is proper under Art. 2206 of the Civil Code.
In this case, the computation for loss of earning capacity is as follows:
Life Expectancy= [2/3 (80-age at the Time of Death)]
Net Earning = Life Expectancy     x  [Gross Annual Income – Reasonable and  Necessary
Expenses]         to Vivian. The trial court overlooked awarding the additional damages, which were
 
ACTUAL DAMAGES
Actual damages must be substantiated by documentary evidence, such as receipts,
in order to prove expenses incurred as a result of the death of the victim or the
physical injuries sustained by the victim.  A review of the valid receipts submitted
in evidence showed that the funeral and related expenses amounted only to
P114,948.60,  while the medical expenses of Vivian  amounted only to P12,244.25, 
yielding a total of P127,192.85 in actual damages.      AIR FRANCE v. GILLEGO, G.R. No. 165266, Dec. 15, 2010.
MORAL DAMAGES FOR DEATH OF HUSBAND
Moreover, the Court of Appeals correctly sustained the award of moral damages in the
amount of P50,000.00 for the death of Vivian’s husband.  Moral damages are not
intended to enrich a plaintiff at the expense of the defendant. They are awarded to allow
the plaintiff to obtain means, diversions or amusements that will serve to alleviate the
moral suffering he/she has undergone due to the defendant’s culpable action and must,
perforce, be proportional to the suffering inflicted.
TEMPERATE DAMAGES
In addition, the Court of Appeals correctly awarded temperate damages in the
amount of P10,000.00 for the damage caused on Vivian’s motorcycle. Under Art.
2224 of the Civil Code, temperate damages “may be recovered when the court finds that
some pecuniary loss has been suffered but its amount cannot, from the nature of the
case, be proved with certainty.”   The cost of the repair of the motorcycle was prayed for
by Vivian in her Complaint.  However, the evidence presented was merely a job estimate
of the cost of the motorcycle’s repair amounting to P17, 829.00. The Court of Appeals
aptly held that there was no doubt that the damage caused on the motorcycle was
due to the negligence of Philippine Hawk’s driver.  In the absence of competent
proof of the actual damage caused on the motorcycle or the actual cost of its repair, the
award of temperate damages by the appellate court in the amount of P10,000.00 was
reasonable under the circumstances.
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2015.
 
MORAL DAMAGES FOR VIVIAN’S PHYSICAL INJURIES
The Court of Appeals also correctly awarded Vivian moral damages for the physical
Code, moral damages may be recovered in quasi-delicts causing physical injuries.
However, the award of P50,000.00 should be reduced to P30,000.00 in accordance with
prevailing jurisprudence.
 
DEATH INDEMNITY FOR HUSBAND
Further, the Court of Appeals correctly awarded Vivian civil indemnity for the death of
her husband, which has been fixed by current jurisprudence at P50,000.00. The
In fine, the Court of Appeals correctly awarded civil indemnity for the death of
Vivian’s husband, temperate damages, and moral damages for the physical
injuries sustained by Vivian in addition to the damages granted by the trial court
prayed for by Vivian in her Amended Complaint.  The appellate court is clothed with
ample authority to review matters, even if they are not assigned as errors in the appeal,
if it finds that their consideration is necessary in arriving at a just decision of the case.
20 AIR FRANCE V. GILLEGO, 638 SCRA 472 –MUTI
Common Carrier Air France
Passenger Congressman Gillego
Problem Cong. Gillego’s baggage was lost, returned to him only after 2yrs.
Trial Court awarded Moral P1M & Exemplary P500K.
Who Won GILLEGO, BUT AFFIRMED with MODIFICATION in that the award of
moral damages, exemplary damages and attorney’s fees are hereby
reduced to P200,000.00, P50,000.00 and P30,000.00, respectively.
ER: Gillego, an incumbent Congressman of Sorsogon, flew with Air France (AF) to attend
a conference. While in Paris (connecting flight to Budapest), he rebooked his ticket for
an earlier flight. Upon arriving at Budapest, he was unable to locate his baggage
which contains his personal effects (clothes, medicine, speeches prepared, etc.).
He had repeatedly claimed such loss from AF but to no avail. The baggage was
returned to him only after 2yrs, during the pendency of the case he filed against AF.
Trial court in that case awarded P1M and P500K for moral and exemplary damages,
respectively.
The issue is whether such amount was proper. – EXCESSIVE!
HELD: In repeatedly ignoring Gillego’s inquiries, AF’s employees exhibited an indifferent

attitude without due regard for the inconvenience and anxiety he experienced after
realizing that his luggage was missing.  AF was thus guilty of bad faith in breaching its
contract of carriage, which entitles Gillego to the award of moral damages. HOWEVER,
the sum of P1M  awarded by the trial court is excessive and not proportionate to
 AF filed its answer admitting the loss of Gillego’s checked-in luggage upon arrival at
the loss or suffering inflicted on the passenger under the circumstances.  Although
the court is given the discretion for the assessment of damages, the amount must be
fair, reasonable and proportionate to the injury suffered. Hence, the amount was
reduced to P200K and P50K for moral and exemplary damages, respectively
07 Transpo Compiled Digests. Week 8. Atty. Ampil 3C 36
2015.
resulting from the loss of his luggage, aggravated by the fact that he failed to take
his regular medication, Gillego had to be taken to a medical clinic in Tokyo, Japan
for emergency treatment.
Budapest, which luggage has not been retrieved to date and that Gillego’s repeated
follow-ups ignored. 
o However, as to the rest of Gillego’s allegations, AF said it has no
knowledge and information sufficient to form a belief as to their truth

Facts:
 Bonifacio H. Gillego (“Gillego”), then incumbent Congressman of Sorsogon and
Chairman of the House of Representatives Committee on Civil, Political and Human
Rights, was invited to participate as one of the keynote speakers at the 89th Inter-
Parliamentary Conference Symposium on Parliament Guardian of Human Rights to be
held in Budapest, Hungary and Tokyo, Japan.
 Gillego left Manila on board Air France’s (“AF”) aircraft bound for Paris, France.   baggage, the contents of which Gillego did not declare,  and that it has no
While waiting in Paris for his connecting flight to Budapest, Gillego learned that AF
had another aircraft bound for Budapest with an earlier departure time (10AM).  He
then made arrangements for the change in his booking.  other causes beyond the carrier’s control.
 Upon arriving in Budapest, Gillego was unable to locate his luggage at the claiming
section. He sought assistance from AF’s counter at the airport.  He was advised to
just wait for his luggage at his hotel and that AF’s representatives would take
charge of delivering the same to him that same day.  But said luggage was never
delivered.
 Upon his return to the Philippines, Gillego’s lawyer immediately wrote AF’s Station
Manager complaining about the lost luggage and the resulting damages he suffered
while in Budapest.  Gillego claimed that:
o It contended that its liability for lost checked-in baggage is governed by
the Warsaw Convention. 
 Under the said treaty, AF’s liability for lost or delayed registered
baggage of respondent is limited to 250 francs per kilogram or
US$20.00, which constitutes liquidated damages.
o It also averred that it has taken all necessary measures to avoid loss of the
intent to cause such loss, much less knew that such loss could occur.
o The loss is due to or occasioned by force majeure or fortuitous event or
o Diligent, sincere and timely efforts were exerted by AF to locate
respondent’s missing luggage and attended to his problem with utmost
courtesy, concern and dispatch. 
o Hence, the claims for actual, moral and exemplary damages and attorney’s
fees therefore have no basis in fact and in law, and are, moreover
speculative and unconscionable.
 Trial court rendered its decision in favor of Gillego, awarding the sum of:

o His single luggage contained his personal effects such as clothes, toiletries, 1.  The sum of P1,000,000.00 as moral damages;
medicines for his hypertension, and the speeches he had prepared, 2.   The sum of P500,000.00 as exemplary damages;
including the notes and reference materials he needed for the conference.  3.   The sum of P50,000.00 as attorney’s fees; and
He was forced to shop for personal items including new clothes and his  CA affirmed. It noted that in the memorandum submitted by AF before the trial
medicines.  court it was mentioned that Gillego’s luggage was eventually found and delivered to
o Aside from these unnecessary expenditures of about $1,000, he had to him, which was not denied by Gillego and thus resulted in the withdrawal of the
prepare another speech, in which he had difficulty due to lack of data and claim for actual damages. 
information.   AF assails the trial and appellate courts for awarding extravagant sums to Gillego. It
o He thus demanded the sum of P1M from AF as compensation for his loss, points out that:
inconvenience and moral damages. He was still ignored. o Gillego was able to reconstruct the speeches, notes and study guides he
 Gillego filed a complaint for damages against AF alleging that by reason of its had earlier prepared for the conference, and to attend, speak and
negligence and breach of obligation to transport and deliver his luggage, he suffered participate therein as scheduled. He should have had no difficulty
inconvenience, serious anxiety, physical suffering and sleepless nights. delivering his speech even without his notes, given his expertise.

 It was further alleged that due to the physical, mental and emotional strain o Bearing in mind that the actual damages sought by Gillego was only
$2,000.00, then clearly the trial court went way beyond that amount in

determining the appropriate damages, inspite of the fact that Gillego
eventually got back his baggage.
o AF or its agents were never rude or discourteous toward Gillego; he was
not subjected to humiliating treatment or comments.   The mere fact that
he was a Congressman should not result in an automatic increase in the
moral and exemplary damages recoverable. 
o The TC incorrectly concluded that AF had not prepared a Property
Irregularity Report (PIR) but fabricated one only as an afterthought.  A
PIR can only be initiated upon the instance of a passenger whose baggage
had been lost, and in this case it was prepared by the station where the
loss was reported. 
 AF reiterates that there was no bad faith or negligence on its part and the burden is
on Gillego to prove by clear and convincing evidence that it acted in bad faith.  
Issue:
W/N the amount of award was proper – NO! It is excessive.
HELD: WHEREFORE, the petition is DENIED. The Decision dated June 30, 2004 of the
Court of Appeals in CA-G.R. CV No. 56587 is hereby AFFIRMED with MODIFICATION in
that the award of moral damages, exemplary damages and attorney’s fees are hereby
reduced to P200,000.00, P50,000.00 and P30,000.00, respectively.
Ratio
 That Gillego’s checked-in luggage was not found upon arrival at his destination and
was not returned to him until about two years later is not disputed.  The action filed
is founded on such breach of the contract of carriage with AF who offered no
satisfactory explanation for the unreasonable delay in the delivery of baggage. The
presumption of negligence was not overcome by the AF and hence its liability for
the delay was sufficiently established.  still reduced to P300K, the moral damages granted to Gillego should likewise be
 After a careful review, we find that AF is liable for moral damages.  adjusted.
 AF’s station manager testified that upon receiving the letter-complaint of Gillego’s
counsel, she immediately began working on the PIR (Property Irregularity Report)
from their computerized data.
 The witness further claimed that there was no record or entry in the PIR of any
follow-up call made by the Gillego while in Budapest. Gillego, on the other hand,
claimed that he was not given a copy of this PIR and that his repeated telephone
calls to inquire about his lost luggage were ignored.
 We hold that the trial and appellate courts did not err in finding that petitioner
acted in bad faith in repeatedly ignoring Gillego’s follow-up calls.  The alleged
entries in the PIR deserve scant consideration, as these have not been properly
identified or authenticated by the airline station representative in Budapest who
07 Transpo Compiled Digests. Week 8. Atty. Ampil 3C 37
2015.
initiated and inputed the said entries. 
 Furthermore, this Court cannot accept the convenient excuse given by AF that
Gillego should be faulted in allegedly not giving his hotel address and telephone
number.  
o It is difficult to believe that one who had just lost his single luggage
containing all his necessities for his stay in a foreign land would not give
such vital information to the airline counter where he had promptly and
frantically filed his complaint. 
o Even assuming arguendo that his Philippine address and contact number
were the only details provided for the PIR, still there was no explanation
as to why AF never communicated with Gillego concerning his lost
baggage long after he had already returned to the Philippines.  
 Furthermore, the alleged copy of the PIR confirmed that the only action taken by AF
to locate luggage were telex searches allegedly made on May 17, 21 and 23, 1993. 
There was not even any attempt to explain the reason for the loss.  Clearly, it did
not give the attention and care due to its passenger.
 Inattention to and lack of care for the interest of its passengers who are entitled to
its utmost consideration, particularly as to their convenience, amount to bad faith
which entitles the passenger to an award of moral damages. 
 In repeatedly ignoring Gillego’s inquiries, AF’s employees exhibited an indifferent
attitude without due regard for the inconvenience and anxiety he experienced after
realizing that his luggage was missing.  
 However, we agree with petitioner that the sum of P1M  awarded by the trial court
is excessive and not proportionate to the loss or suffering inflicted on the
passenger under the circumstances. 
 As in Trans World Airlines v. CA where this Court after considering the social
standing of the aggrieved passenger who is a lawyer and director of several
companies, the amount of P500K awarded by the trial court as moral damages was
 
 Article 2216 of the Civil Code provides that assessment of damages is left to the
discretion of the court according to the circumstances of each case.
o This discretion is limited by the principle that the amount awarded should
not be palpably excessive as to indicate that it was the result of prejudice
or corruption on the part of the trial court.  Simply put, the amount of
damages must be fair, reasonable and proportionate to the injury
suffered.
Where as in this case the air carrier failed to act timely on the passenger’s predicament
caused by its employees’ mistake and more than ordinary inadvertence or inattention,
and the passenger failed to show any act of arrogance, discourtesy or rudeness
committed by the air carrier’s employees, the amounts of P200,000.00, P50,000.00 and
 07 Transpo Compiled Digests. Week 8. Atty. Ampil 3C 38
2015.
P30,000.00 as moral damages, exemplary damages and attorney’s fees  would be
sufficient and justified.